Oil slips on recession fears but posts third weekly gain

Oil Prices Fall on Trade War Concerns, But Gain on Opec Pressure

Oil prices fell on Friday (Mar 28) on worries that US tariff wars could spark a global recession, but gained for a third consecutive week after Washington ratcheted up pressure on the Organization of the Petroleum Exporting Countries (Opec) members Venezuela and Iran.

Trade War Concerns Weigh on Oil Prices

US President Donald Trump plans to announce reciprocal tariffs targeting a wide range of imports, effective on Apr 2.

The trade war has investors worried about a potential recession, JPMorgan analysts told clients.

“Concerns about a trade war, coupled with elevated US policy uncertainty, are weighing heavily on sentiment,” they said.

Opec Pressure Boosts Oil Prices

Mid-week data from the Energy Information Administration showed US crude inventories fell by 3.3 million barrels to 433.6 million barrels last week, compared with analysts’ expectations in a Reuters poll for a 956,000-barrel draw.

On a weekly basis, Brent futures gained 1.9 per cent, while WTI rose 1.6 per cent. Since hitting multi-month lows in early March, Brent is up more than 7 per cent, and WTI has rebounded over 6 per cent.

US Sanctions Exacerbate Oil Price Rise

Trump on Monday announced new 25 per cent tariffs on potential buyers of Venezuelan crude, days after US sanctions targeting China’s imports from Iran.

The measures could exacerbate an anticipated 200,000 barrel per day decline in Venezuelan crude oil output this year, said Barclays analyst Amarpreet Singh.

Conclusion

Oil prices fell on Friday due to concerns about a potential global recession, but gained for a third consecutive week as Washington ratcheted up pressure on Opec members Venezuela and Iran. The trade war and US sanctions have led to a rise in oil prices, with Brent futures gaining 1.9 per cent and WTI rising 1.6 per cent on a weekly basis.

FAQs

Q: What caused the fall in oil prices?

A: Oil prices fell due to concerns about a potential global recession.

Q: What caused the rise in oil prices?

A: The rise in oil prices was due to Washington ratcheting up pressure on Opec members Venezuela and Iran.

Q: What are the implications of the US sanctions on oil prices?

A: The US sanctions could exacerbate an anticipated 200,000 barrel per day decline in Venezuelan crude oil output this year, leading to a rise in oil prices.