Oil prices rose 1% on Monday after President Trump announced a 25% tariff on countries purchasing oil and gas from Venezuela. Brent crude increased 84 cents (1.2%) to $73, while WTI gained 83 cents (1.2%) to $69.11. However, price gains were limited as the U.S. granted Chevron until May 27 to wind down its Venezuelan operations, extending the initial 30-day deadline from March 4. The impact of the tariff remains uncertain as enforcement details are unclear.
OPEC+ is expected to proceed with a planned oil output hike in May, while ongoing Ukraine ceasefire talks could lead to increased Russian crude exports. Analysts noted that the potential loss of Venezuelan supply is bullish for oil markets, with investors also monitoring possible tighter restrictions on Iranian exports. The U.S. recently imposed sanctions on Iranian oil exports, targeting a Chinese “teapot refinery” processing Iranian crude.
Both crude benchmarks recorded a second consecutive weekly gain last Friday. Meanwhile, Wall Street surged as Trump signaled flexibility on tariffs, with planned levies on automobiles, aluminum, and pharmaceuticals expected soon. He also urged the Federal Reserve to lower interest rates, arguing that lower borrowing costs would stimulate economic growth and oil demand.
Ceasefire negotiations between U.S. and Russian officials took place in Saudi Arabia on Monday, with discussions on a Black Sea maritime ceasefire alongside broader peace talks. Concerns over increased Russian oil exports weighed on prices.
OPEC+, which controls over 40% of global oil production, plans to increase output by 135,000 bpd in May, marking a second consecutive monthly hike. Since 2022, the group has implemented phased cuts totaling 5.85 million bpd, or 5.7% of global supply, to support prices. Market participants remain cautious about compliance from some OPEC+ members, particularly Iraq, Kazakhstan, and Russia.