Oil prices fell about 2% to a 12-week low on Monday as OPEC+ confirmed it would proceed with a planned production increase in April, while concerns grew that U.S. tariffs could slow global economic growth and reduce oil demand. Brent settled at $71.62 (-1.6%), and WTI closed at $68.37 (-2.0%), marking their lowest levels since early December.
Market sentiment weakened after sources confirmed OPEC+ would move forward with easing supply cuts despite recent price declines. The group has been gradually reducing its 5.85 million barrels per day (bpd) of output restrictions since 2022, and this latest decision suggests confidence in market stability.
Adding to downward pressure, U.S. President Donald Trump is set to finalize tariffs on Canada and Mexico, which include a 25% tax on all imports and a 10% duty on Canadian energy products. Canada’s oil services sector is already slowing in anticipation, while Mexico has stated it is prepared for any outcome. Meanwhile, China announced potential countermeasures against U.S. agricultural tariffs, escalating trade tensions.
Economic data also fueled bearish sentiment. While U.S. manufacturing remained steady in February, factory-gate prices hit a nearly three-year high, raising inflation concerns. Analysts worry that prolonged high interest rates could slow economic growth and energy consumption.
Despite the overall decline in oil prices, gasoline futures surged to a six-month high ahead of the summer driving season, while diesel futures fell to a nine-week low with the end of winter heating demand. WTI prices have now dropped roughly 10% over the past six weeks, prompting speculators to cut their net long positions to their lowest levels since December 2023.