NEW YORK, March 4 (Reuters) – Oil prices plummeted on Tuesday, nearing multi-month lows, following news that OPEC+ would continue with planned output increases in April, alongside the announcement of U.S. tariffs on Canada, Mexico, and China, as well as retaliatory measures from Beijing.
Brent crude futures dropped 58 cents, or 0.8%, settling at $71.04 per barrel. The session’s low was $69.75, the lowest since September. U.S. West Texas Intermediate (WTI) crude decreased by 11 cents, or 0.2%, to $68.26. Earlier, WTI had fallen to $66.77, its lowest point since November.
OPEC+—which includes the Organization of the Petroleum Exporting Countries (OPEC) and its allies such as Russia—decided on Monday to go ahead with an April oil output increase of 138,000 barrels per day, marking the first such increase since 2022. The decision came as a surprise to many analysts.
Bjarne Schieldrop, chief commodities analyst at SEB, noted, “The change in OPEC’s strategy suggests they are prioritizing political concerns over price. These politics may be linked to the actions of Donald Trump, who has previously called for lower oil prices.”
In addition to OPEC+’s decision, U.S. tariffs of 25% on imports from Canada and Mexico took effect early Tuesday, with 10% tariffs on Canadian energy products. The U.S. also raised tariffs on Chinese imports from 10% to 20%. These moves are expected to dampen economic activity and reduce demand for energy, further pressuring oil prices.
In retaliation, China announced it would increase tariffs by 10-15% on a range of American agricultural and food products and impose export restrictions on 25 U.S. companies.
Despite these developments, oil prices steadied as the trading session progressed. Geopolitical tensions also eased somewhat after Ukrainian President Volodymyr Zelenskiy expressed regret over last week’s tense meeting with Donald Trump in the Oval Office. Sources told Reuters that the U.S. and Ukraine were expected to sign a minerals deal soon.
On Monday, Trump paused all U.S. military aid to Ukraine. This followed reports that the White House had instructed the State and Treasury departments to prepare a list of sanctions that could be lifted during upcoming talks with Moscow. Easing sanctions could increase Russian oil supply, but Goldman Sachs analysts noted that Russia’s oil exports are more constrained by OPEC+ production targets than by sanctions.
Goldman Sachs also warned of downside risks to oil price forecasts, citing higher-than-expected crude supply and weaker U.S. economic activity. Analysts also pointed to declining Chinese demand for oil, as the country enters a period of refinery maintenance.
In a separate development, the Trump administration announced on Tuesday it would revoke a license granted to U.S. oil producer Chevron to operate in Venezuela. The license had been in effect since 2022, allowing Chevron to export Venezuelan oil. Washington accused Venezuelan President Nicolas Maduro of failing to make progress on electoral reforms and migrant returns.
Market participants are now awaiting data on U.S. crude stockpiles, set to be released on Wednesday. According to the American Petroleum Institute (API), U.S. crude oil stocks fell by 1.46 million barrels in the week ending February 28.
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