Oil Prices Steady as Trump Push for Lower Prices

Oil Prices Steady as Trump Push for Lower Prices

Oil prices were stable on Friday but set to decline for the week, ending a four-week streak of gains.

By 1 p.m. EST (1800 GMT), Brent crude futures were down by 6 cents, or 0.08%, at $78.23 per barrel, while U.S. West Texas Intermediate (WTI) dropped by 23 cents, or 0.31%, to $74.39.

Weekly Decline After Four Weeks of Gains

• Brent Crude: Down 3.2% this week
• WTI: Down 4.5%

This follows U.S. President Donald Trump’s announcement to boost domestic production and his demands for OPEC to lower crude prices, a move aimed at pressuring Russia’s finances and bringing an end to the war in Ukraine.

Trump’s Call for OPEC Action

Trump reiterated his demand for OPEC to cut oil prices in an effort to curb Russia’s financial support for the war. Speaking to reporters, Trump emphasized that reducing oil prices would have an immediate impact on the conflict.

“I believe the war will stop right away if OPEC drops the price of oil,” Trump said, highlighting the financial pressures on Russia.

Impact of U.S. Sanctions on Russia and Iran

While Trump’s calls for lower prices have drawn attention, the threat of harsh U.S. sanctions on Russia and Iran, both key oil producers, could complicate efforts to reduce prices. Analysts suggest Trump may need to rely on OPEC to fill the gap caused by these sanctions.

“The sanctions on Russia and Iran may limit the potential impact of Trump’s strategy,” said Alex Hodes, a StoneX analyst.

OPEC+ Response to Trump’s Demands

Despite Trump’s public pressure, OPEC and its de facto leader, Saudi Arabia, have yet to respond to the request for price reductions. OPEC+ plans to increase output starting in April, which could limit the group’s willingness to act before then.

Analysts expect OPEC’s response to remain muted unless there is a significant change in market fundamentals, such as new sanctions or altered supply/demand dynamics.

Domestic Production Expansion

Chevron announced on Friday the start of production at the $48 billion Tengiz oilfield expansion, which will increase global oil supply by 1%. This added production could further challenge OPEC’s efforts to manage supply.

Trump’s Energy Policy and Market Uncertainty

Trump’s recent actions include declaring a national energy emergency and rolling back environmental restrictions to maximize domestic oil and gas output. These moves are expected to increase U.S. production, but some analysts warn that the potential for oversupply could complicate the global market.

“The lower-hanging fruit for growth has already been picked,” said Hodes from StoneX, suggesting that the easier gains in U.S. production may have already been realized.

Tariffs and Global Oil Demand Concerns

Trump’s tariffs on countries like China, Canada, and Mexico, along with the possibility of a 10% duty on China, are creating further uncertainty in global oil markets. The potential for these tariffs to harm global growth and oil demand is weighing on market sentiment.

Traders are keeping a close watch on these developments, with oil prices expected to fluctuate between $76.50 and $78 a barrel in the short term.

U.S. Crude Inventories Hit Lowest Level Since March 2022

Despite concerns about oversupply, U.S. crude inventories dropped to their lowest levels since March 2022, signaling some tightening in domestic supply. However, weak demand from major economies, particularly China, continues to pose challenges for oil prices.

Conclusion: A Balancing Act for Oil Markets

Oil prices are facing significant headwinds from geopolitical factors, U.S. domestic policies, and fluctuating global demand. With Trump’s push for lower prices, the ongoing expansion of U.S. oil production, and the uncertainty surrounding sanctions and tariffs, the energy market remains in a state of flux.

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