Oil prices have dropped for three consecutive days, falling nearly 3 percent to reach their lowest point in three years. This decline raises concerns about the impact of U.S. President Donald Trump’s trade war on the economy and crude oil demand.
On Wednesday, Brent crude, the global oil standard, fell to $68.33, marking its lowest level since December 2021. Meanwhile, West Texas Intermediate (WTI), the U.S. benchmark, decreased by over 4 percent to hit $65.22.
These price shifts followed a report from the U.S. Energy Information Administration (EIA) that revealed a more significant-than-expected increase in domestic crude oil inventories. The report exacerbated worries about an economic slowdown, especially after Trump announced new trade tariffs this week affecting Canada, Mexico, and China.
Crude oil stocks saw a rise of 3.6 million barrels in the previous week, far surpassing what analysts had predicted. This data is part of a troubling trend for oil demand.
“The main concern for markets right now is Trump’s tariffs, the responses from the impacted countries, and the unfolding situation,” said Callum Macpherson, head of commodities at Investec. He mentioned that prices could face even more significant corrections.
The decrease in prices was compounded by OPEC+’s recent announcement, which took the market by surprise. The group confirmed it would begin increasing crude oil production in April, resuming plans that had been previously postponed. This means that key members, including Saudi Arabia and Russia, will collectively rise production by 120,000 barrels per day (bpd) in April, aiming for an overall increase of 2.2 million bpd over the next 18 months.
OPEC+ has been cutting production for several years to elevate crude prices, often disregarding calls from the U.S. to boost output to help lower fuel costs for American consumers.
Currently, due to three different sets of output cuts, OPEC+ members are producing nearly 6 million bpd less than their total capacity, which accounts for approximately 6 percent of the global oil supply.
Saudi Arabia has handled most of these cuts, reducing its output by 2 million bpd over the last two years. Recent reports indicate that, for the first time in several years, Saudi officials are considering restoring production levels, even if this leads to a prolonged period of lower prices.
Amrita Sen from Energy Aspects noted that falling WTI prices have dropped below levels where U.S. producers had taken measures to protect against price declines, contributing to market instability. “Concerns about liquidity and growth have negatively impacted overall sentiment, causing crude to fall below critical price thresholds and triggering further downward movements,” she explained.