Brent crude prices continue to slide following the OPEC + announcement that they would follow through with a planned output increase in April. This has led to Brent crude dropping to trade at levels last seen in September 2024 and the lowest prices of 2025 thus far.
OPEC + To Follow Through with Output Increases
OPEC+ plans to gradually increase oil supply in April by 138,000 barrels per day. Some including myself thought they might delay this increase toward the second half of 2025 at the earliest. The move is likely to please President Trump, who has been pushing OPEC to raise output.
OPEC’s oil production rose by 320,000 barrels per day in February, reaching 27.35 million barrels per day. Most of the rise came from Iraq, which increased output by 150,000 barrels per day to 4.16 million, surpassing its 4 million target. Libya, Venezuela, and the UAE also saw notable production increases.
In other news related to OPEC +, the Trump administration announced on Tuesday that it will end the license allowing Chevron (NYSE:CVX) to operate in Venezuela and export its oil. This decision comes after the U.S. accused President Nicolas Maduro of failing to make progress on electoral reforms and managing migrant returns. Chevron has until April 3 to stop exporting oil from Venezuela, according to the updated license from the U.S. Treasury Department.
Venezuela are a founding member of OPEC and has always been critical of US sanctions, likening them to economic warfare. The news however, did little to arrest the downside momentum in crude oil prices today.
Tariffs Have Arrived and Demand Fears are Rising
Starting at 12:01 a.m. EST on Tuesday, the U.S. imposed 25% tariffs on imports from Canada and Mexico. Canadian energy imports now face a 10% tariff, while tariffs on Chinese goods were raised from 10% to 20%.
Tariffs have long concerned market participants who fear that it could hobble economic growth and thus weaken Oil demand moving forward. The implementation of the tariffs could not have come at a worse time as it coincided with the OPEC announcement.
The two developments together formed a perfect cocktail which pushed Brent prices to six-month lows.
Another concern weighing on the minds of market participants comes from negotiations between Russia and the US. There have been rumors of easing sanctions on Russia which could have an impact as more Russian Oil would hit markets and increase supply.
Week Ahead and Final Thoughts
Inventories data will once again be key this week but I will still be focusing on tariff developments and comments from the US, Canada and Mexico. Mexican President Claudia Sheinbaum announced earlier in the day that Mexico would respond with its own tariffs by Sunday.
I will also be paying attention to ongoing developments around a US led peace deal between Russia and Ukraine and any concessions the US are willing to make regarding Russian Oil and gas.
Lastly, talks to restart oil exports from Iraq’s Kurdistan region have been pushed back to Thursday due to disagreements between oil companies and the oil ministry, according to three sources. The meeting was originally planned for Tuesday, but Sunday’s initial talks ended without a deal. Another development that could further increase Oil supplies and thus have a downward impact on prices.
Technical Analysis
This is a follow-up analysis of my prior report. From a technical analysis standpoint, Brent is now trading at six-month lows but has bounced off a key level of support at 70.178.
This will be Brent Crudes third successive bearish day in a row. There is a chance of a bounce back toward support turned resistance at 72.38 before the bearish trend continues.
In order for bulls to regain some control a daily candle close above the 74.00 handle would lead to a change in structure.
Until this happens bears remain firmly in control with a break below the 70.00 psychological level looking more and more likely in the coming days.
Brent Crude Oil Daily Chart, March 4, 2025
Source: TradingView (click to enlarge)
Support
- 70.178
- 69.526
- 68.179
Resistance
- 72.389
- 76.35
- 79.00