Oil prices had already been trading lower in the last few weeks, partly because of expectations that US president Donald Trump could swiftly end Russia’s war in Ukraine. This, in turn, is likely to increase Russian oil output thanks to sanctions relief.
The price of crude oil dropped around 0.8% on Tuesday, to about $67.8 per barrel, whereas Brent crude oil also fell 1.4% to around $70.6 per barrel. This was after the OPEC+ committee revealed earlier this week that it would raise its oil output in April this year.
On Monday, OPEC+ said it would ramp up oil production to 2.2mn barrels a day over the next 18 months, representing 2% of global demand.
Increasing output was a move that had previously been suggested, although investors expected the decision to be postponed – as has been the case in the past.
The firm said in a press release: “The eight OPEC+ countries, which previously announced additional voluntary adjustments in April and November 2023, namely Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman met virtually on March 3, 2025, to review global market conditions and the future outlook.”
“Taking into account the healthy market fundamentals and the positive market outlook, they reaffirmed their decision agreed upon on December 5, 2024, to proceed with a gradual and flexible return of the 2.2 mbd voluntary adjustments starting on 1st April, 2025, while remaining adaptable to evolving conditions.”
The committee highlighted that this measured raise could be reversed or paused, depending on market conditions.
Factors affecting oil prices
On Monday, US president Donald Trump announced that the planned 25% tariffs against all goods imported from Canada and Mexico would go into effect on Tuesday. This also contributed to dampened sentiment in the global oil market as investors feared the economic consequences.
Oil prices have been lower in the last few weeks, partly because of expectations that US president Donald Trump would be instrumental in helping negotiate a peace deal in Russia’s war in Ukraine. If achieved, this may help to revive Russian oil output, currently hampered by sanctions.
Trump has also shared plans to impose significant sanctions on Iran, which aim to slash Iranian oil exports to almost zero. If so, this could impact countries like India, while also supporting oil prices.
Syed Muhammad Osama Rizvi, energy market analyst at Primary Vision, reiterated the view that a potential ceasefire in Ukraine would allow more Russian oil to enter the market.
“The shift in sentiment can be observed by looking at the CFTC and ICE data that highlights that hedge funds and money managers have sold over 260 million equivalent of barrels in oil contracts,” he said.
“The market is well-supplied, if not oversupplied. Any addition of further barrels will put downward pressure on oil prices.”
Dr. Yousef Alshammari, president of the London College of Energy Economics, pointed out that oil prices could potentially go under $70 per barrel. He also predicted that oil prices could be further impacted by US tariffs on China, which could have a knock-on effect on global oil demand. This in turn, could send a bear signal to the oil market.
“Another issue here is Russia. It looks like president Trump is trying to restore relations with Russia, so easing the sanctions. So that will facilitate the trading of Russian oil compared to before, although we don’t expect Russian oil to be back to Europe immediately,” said Alshammari.
Britain’s FTSE 100 index was down 0.5% on Tuesday afternoon, with the STOXX 600 index also 1.5% lower. Germany’s DAX 40 index fell 2.1% on Tuesday afternoon, with France’s CAC 40 index also dropping 1.5% during this time.
