Oil Drops as Supply, Geopolitical Concerns Cloud Outlook
Oil fell as the prospect of rising Iraqi supplies weighed on prices, with U.S. President Donald Trump’s efforts to end the three-year war in Ukraine also in focus.
Global benchmark Brent was steady above $74 a barrel after falling nearly 3% on Friday, while U.S. West Texas Intermediate crude briefly fell below $70 at the open of the week. Iraq may ship 185,000 barrels a day from the semi-autonomous Kurdistan region if a pipeline to Turkey resumes operations, an Iraqi deputy minister said. No timetable has been set.
Ukrainian President Volodymyr Zelenskiy has said he would be prepared to resign if it would ensure peace in his country. Trump has called for Ukraine to hold elections, and opened talks with Russia.
A settlement with Moscow could pave the way for sanctions relief, potentially redirecting export flows. Crude has had a bumpy start to 2025 as a series of early gains unraveled, with prices losing all of this year’s gains.
The decline came as Trump’s tariffs weighed on the global growth outlook, U.S. stockpiles rose and concerns persisted about weak Chinese demand. At the same time, market metrics pointed to less tight near-term physical conditions. “There are too many questions,” including about the possibility of a cease-fire in Ukraine and its implications for the oil market, said Chris Weston, head of research at Pepperstone Group.
With so much uncertainty, crude will likely take its cues from economic data including from the U.S. this week, he said. WTI’s prompt spread — the difference between its two nearest contracts — has narrowed, indicating a less bullish market.
The gap was 17 cents a barrel in backwardation on Monday, about a quarter of the differential a month ago. With the market weakening, OPEC and its allies are now expected to again delay plans to revive production as the market faces a potential surplus.
More than 70% of traders and analysts surveyed expect the group to delay its first monthly increase scheduled for April.
Brent for April delivery fell 0.1% to $74.34 a barrel at 2:08 p.m. in Singapore.
WTI for April delivery fell 0.2% to $70.23 a barrel.
Earlier, futures fell as much as 0.9% to $69.80.
Source: Bloomberg
