On Wednesday, WTI crude oil futures continued to rise and settled around $68.3 per barrel. This was the third consecutive day of gains amid growing concerns about supply disruptions caused by ongoing conflicts in the Middle East. The Israeli airstrike on Gaza and U.S. President Trump’s threat to hold Iran accountable for any Houthi attacks in Yemen have heightened tensions in the region and contributed to the rise in oil prices.
One of the main causes of the recent price rise has been an expected increase in demand from China, the world’s largest oil importer. This is due to its economic stimulus plans and positive data on the economy. However, the potential rise in prices could be held back by progress in peace negotiations between Russia and Ukraine, which could lead to increased supply in the global market. In addition, U.S. President Trump is expected to talk with Putin today to try to end the ongoing war between the two countries.
Another significant risk factor for oil prices is escalating trade tensions, which is worrying investors about economic growth and energy demand.
Currently, oil is not having a good time, with a 5 percent decline in quotations over the past three months. The main cause of this pressure is OPEC+’s announcement to increase production in April.
In addition, markets are preparing for the impact of U.S. tariffs on Canada, Mexico, and China, and possible retaliatory measures by China against the United States.
Concerns about a possible global trade war are affecting the energy market. Fears are that this could hurt economic growth and reduce energy demand, leading to an uncertain situation where supply from the OPEC cartel is increasing while demand remains unstable.
The news is not very positive as oil production continues to increase. The Organization of the Petroleum Exporting Countries (OPEC) and its allies, such as Russia, known as OPEC+, have decided to increase oil production by 138,000 barrels per day starting in April, a move that marks the first increase since 2022. Although this increase aims to phase out previous production cuts, it has raised concerns about a potential abundance of supply in the market.
The 25 percent tariffs on goods from Mexico and Canada went into effect at the same time as the 10 percent increase on Chinese goods. In response, Beijing immediately imposed taxes of up to 15% on imports of key U.S. agricultural products. The current situation leads to a widespread and dangerous trade war, which can negatively affect economic growth and the outlook on oil demand.
When studying oil, it is also essential to consider the trading currency, which is the US dollar. In 2025, I predict that the dollar will continue to strengthen while the Fed keeps interest rates high. This may not be favorable for oil prices.
From a technical point of view, the situation on Oil is even worse. The decline is accompanied by above-average volumes, and prices remain consistently below the 200-period moving average.
According to my forecast, oil prices are expected to stabilize around $60 per barrel in the coming quarters.
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