Oil settles down greater than 1% on tariff fear, supply-demand expectations

By Amanda Stephenson and Paul Carsten

CALGARY (Reuters) -Oil costs fell over 1% on Thursday as markets weighed macroeconomic issues, together with the chance that tariff wars between the U.S. and different international locations may damage international demand in addition to uncertainty stemming from a U.S. proposal for a Russia-Ukraine ceasefire.

Brent futures settled $1.07, or 1.5%, decrease at $69.88 a barrel. U.S. West Texas Intermediate crude futures fell $1.13, or 1.7%, to $66.55 a barrel.

The Worldwide Power Company reported that international oil provide may exceed demand by round 600,000 barrels per day this yr, with international demand now anticipated to rise by simply 1.03 million bpd, off final month’s forecast by 70,000 bpd.

The report cited deteriorating macroeconomic circumstances, together with escalating commerce tensions.

On Thursday, U.S. President Donald Trump threatened to slap a 200% tariff on wine, cognac and different alcohol imports from Europe, opening a brand new entrance in a world commerce warfare and sparking investor worries about stiffer commerce obstacles all over the world’s largest shopper market.

Commerce tensions have rattled buyers, shoppers and enterprise confidence. U.S. inventory indexes fell, dragging down oil market sentiment regardless of favorable fundamentals resembling authorities knowledge exhibiting tighter-than-expected oil and gas inventories, mentioned Phil Flynn senior analyst with Worth Futures Group.

“It is creating this push-pull dynamic,” Flynn mentioned. “Will we concentrate on provide and demand, which nonetheless seems fairly bullish, or will we concentrate on tariffs?”

The tariffs state of affairs is the main issue weighing available on the market’s notion of oil demand progress in 2025, mentioned Andrew Lipow, president of Houston-based Lipow Oil Associates.

“The expectation is that the tariffs and retaliatory tariffs are going to finally impression the patron,” Lipow mentioned.

Additionally on Thursday, Russian President Vladimir Putin mentioned Moscow agreed with U.S. proposals to cease combating however any ceasefire ought to result in an enduring peace and deal with root causes of the battle.

The market is weighing the potential for a short-term ceasefire between Russia and Ukraine, although UBS analyst Giovanni Staunovo mentioned he “stays skeptical” that this could enhance the provision of Russian oil.

With Trump’s said dedication to cheaper oil, Citi analysts mentioned their outlook for Brent by the second half of 2025 is $60 a barrel. 

On Wednesday, the Group of the Petroleum Exporting Nations mentioned Kazakhstan led a sizeable bounce in February crude output by OPEC . The producer group seeks to implement adherence to agreed output targets, even because it intends to unwind manufacturing cuts.

Worries about flagging jet gas demand weighed additional on markets, with JP Morgan analysts saying that U.S. Transportation Safety Administration knowledge confirmed “passenger volumes for March have decreased by 5% year-over-year, following stagnant site visitors in February”.

Nevertheless, the JP Morgan analysts added: “As of March 11, international oil demand averaged 102.2 million barrels per day, increasing 1.7 million barrels per day year-over-year and exceeding our projected improve for the month by 60,000 barrels per day.”

(Reporting by Amanda Stephenson in Calgary, Paul Carsten in London, Trixie Yap and Yuka Obayashi. Enhancing by Chizu Nomiyama, Kirsten Donovan and David Gregorio)