Oil Prices Dip Due to Trade Tensions, Supply Concerns
(MENAFN) Oil prices continued their downward trajectory on Wednesday, pressured by fears of weak demand due to the ongoing trade war between the U.S. and China, and growing worries about an oversupply in the market.
Brent crude, the international benchmark, dropped by roughly 1.09%, trading at $62.31 per barrel by 10:34 a.m. local time (0734 GMT), down from $63 during the previous session's close.
Meanwhile, U.S. benchmark West Texas Intermediate (WTI) fell around 1.25%, settling at $59.19 per barrel, compared to $59.94 at the end of the previous day.
Both benchmarks had hit their lowest levels in four years on April 9, following a steep plunge triggered by U.S. President Donald Trump's April 2 announcement of new tariffs on imports from major trade partners, coupled with China’s quick retaliation.
Though recent trade talks have sparked some optimism in markets, the shifting tariff rhetoric continues to fuel concerns over the potential for prolonged economic slowdowns.
With worries intensifying over weak demand and a potential supply glut, oil prices are on track for their steepest monthly drop since November 2021, with Brent and WTI both falling by more than 16%.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, are anticipated to boost production in June, raising concerns of an even bigger supply surplus.
A meeting is scheduled for May 5 among key producers such as Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman to discuss output levels.
Meanwhile, the ongoing ceasefire negotiations between Russia and Ukraine, along with nuclear talks between the US and Iran, are helping to ease geopolitical tensions, which is also affecting oil price trends.
On the supply front, the American Petroleum Institute (API) reported a 3.76 million-barrel increase in US crude inventories last week, amplifying concerns about demand in the world’s largest oil consumer and further driving prices down.
The US Energy Information Administration (EIA) is expected to release official inventory figures later in the day.
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