Oil Prices Experience Decline Amid Production Increase Plans and Tariff Concerns
On March 5, 2025, oil prices continued to decline for the third consecutive session, impacted by diminished investor confidence stemming from major producers’ plans to increase oil production in April. Additionally, fears surrounding the introduction of US tariffs on imports from Canada, Mexico, and China have raised concerns about potential economic slowdown and its effect on oil demand.
Brent crude futures saw a decrease of 15 cents, settling at $70.89 a barrel as of 02:00 GMT. Meanwhile, US West Texas Intermediate crude prices dropped by 40 cents per barrel, equating to a decline of 0.6%, and are now priced at $67.86.
OPEC+ Production Increase
The Organization of the Petroleum Exporting Countries (OPEC) alongside its allies, including Russia—a coalition referred to as OPEC+—announced on Monday the decision to lift production for the first time since 2022. The coalition aims to implement a modest production increase of 138,000 barrels per day starting in April. This initiative marks the initial phase of a strategy designed to gradually reduce their existing cuts of approximately 6 million barrels per day, which represents about 6% of the global oil demand.
Impact of US Tariffs
In a related development, new customs duties were introduced, imposing a 25% tariff on all imports from Mexico, a 10% tariff on Canadian energy imports, and a doubling of tariffs on Chinese goods to 20%. Furthermore, the previous administration had already imposed a 25% duty on all other imports from Canada.
As these economic dynamics unfold, stakeholders in the oil market and beyond will continue to monitor the implications of increased production levels and tariff policies on global economic growth and demand trajectories.
