By The Rio Times | Created at 2025-01-22 21:34:58 | Updated at 2025-01-31 17:48:50
1 week ago
The oil market witnessed a downturn on Wednesday as future contracts closed lower. This decline stems from anticipated increases in drilling permits under President Donald Trump’s administration, raising overproduction concerns.
The market also absorbed Trump’s threats to impose tariffs and sanctions on Russia if the Ukraine war continues. The New York Mercantile Exchange (Nymex) saw West Texas Intermediate (WTI) crude for March delivery fall by 0.51%, or $0.39.
It closed at $75.44 per barrel. Concurrently, Brent crude for the same month on the Intercontinental Exchange (ICE) dropped 0.36% or $0.29, settling at $79.00 per barrel.
Ritterbusch, a market analysis firm, suggests that uncertainties surrounding Iran sanctions, U.S. tariffs on Canada and Mexico, and a potential end to the Russia-Ukraine conflict could provide support for oil prices.
These factors create a complex landscape for the oil market. TD Securities predicts a temporary increase in WTI crude prices if stricter sanctions are imposed on Russia.
Oil Prices Dip on Overproduction Fears Trump’s Russia Threats. (Photo Internet reproduction)However, the investment bank cautions about OPEC+ overproduction. The group is reportedly producing over one million barrels per day above quota, with idle capacity exceeding five million barrels daily.
Oil Market Shifts
The oil market’s focus has shifted to Trump’s trade policies, according to ING. The Dutch bank warns of growing trade and tariff risks, along with potential retaliation. Pepperstone echoes this sentiment, stating that Trump’s political direction could play a crucial role.
It may shape the commodity’s short-term trajectory. Earlier, Citigroup raised its Brent crude forecast to $75 for the first quarter and $68 for the second quarter, citing geopolitical tensions.
Most revisions were about $5 higher than the bank’s previous projections. Citigroup also predicted a decline to $63 in the third quarter. The oil market remains in flux, balancing production concerns, geopolitical tensions, and policy uncertainties.
These factors create a challenging environment for predicting future price movements. Market participants must stay vigilant and adapt to rapidly changing conditions in this dynamic sector.
