Oil prices declined on Monday as renewed concerns over U.S. trade tariffs and expectations of rising output from OPEC+ weighed on market sentiment.
Brent crude oil, against which Nigerian oil is priced, fell by 97 cents or 1.4 percent to $66.99 per barrel while U.S. West Texas Intermediate (WTI) dropped 96 cents or 1.5 percent to $63.72 as of 07:40 Nigerian time.
The retreat follows a sharp rebound last week when both benchmarks gained over 3 percent during Thursday’s session.
The gains were driven by supply concerns and geopolitical developments but the momentum reversed as investor focus shifted to macroeconomic headwinds and rising output expectations.
Market analysts say the broader trend remains tilted to the downside due to weak conviction in global demand recovery.
According to IG market strategist Yeap Jun Rong, the pressure from tariffs on global trade is dragging down sentiment despite efforts to balance supply and demand.
OPEC+ is scheduled to increase output by 411000 barrels per day starting in May.
The group which includes the Organization of the Petroleum Exporting Countries and allies such as Russia plans to continue unwinding production cuts despite softening demand indicators.
Some of the increased supply may be offset by additional voluntary cuts from members that have exceeded their quotas.
Investor sentiment was also impacted by progress in nuclear talks between the United States and Iran as Iranian officials announced that both parties had agreed to start drafting a framework for a potential agreement.
A U.S. official described the discussions as making very good progress.
Any resolution may eventually lead to the return of Iranian oil to global markets which would add further pressure on prices.
The easing of supply concerns comes amid a fragile global economic environment. A Reuters poll conducted on April 17 indicated that investors now assign nearly a 50 percent probability of a U.S. recession within the next 12 months.
The U.S. remains the world’s largest oil consumer and any slowdown would directly impact demand forecasts.
Financial markets are also reacting to broader risk-off sentiment as the dollar and Asian equity indices recorded losses on Monday.
Investors are monitoring several key economic indicators this week, including flash manufacturing and services PMI data from the U.S. for insight into the pace of economic activity.
Analysts caution that oil prices may face resistance at the $70 level as fundamental risks from trade disputes, monetary tightening and geopolitical uncertainty remain elevated.
With OPEC+ increasing output and demand growth facing new headwinds, the oil market is expected to remain volatile in the near term.
