brent-posts-biggest-weekly-loss-in-4-months-amid-opec-moves

Oil prices witnessed significant volatility this past week as Brent crude posted its biggest weekly loss in four months, while US West Texas Intermediate (WTI) recorded a sharp 4 pc decline.

 

The downward trend was fueled by the Organization of the Petroleum Exporting Countries and its allies (OPEC+) announcing plans to increase oil output in April, coupled with geopolitical uncertainties and shifting trade policies in the United States.

 

On Friday, oil prices made slight gains but retreated from session highs after former US President Donald Trump threatened to impose sanctions on Russia if it failed to reach a cease-fire agreement with Ukraine.

 

Brent crude futures settled at $70.36 per barrel, up 90 cents (1.3 pc), while WTI crude closed at $67.04 per barrel, rising 68 cents (1.02 pc).

 

However, despite the slight recovery, oil prices remained under pressure for the week. Brent crude finished down 3.8 pc, marking its largest weekly decline since November 11, while WTI dropped 3.9 pc, its worst performance since January 21.

Goldman Sachs Warns of Downside Risks Amid OPEC+ Supply Increase

Goldman Sachs analysts have revised their outlook on oil prices, warning of potential downside risks for Brent crude in 2025 and 2026.

 

The bank cited OPEC+’s decision to increase production earlier than expected, along with softer demand signals from the US economy and growing tariff escalations.

 

OPEC+, which includes major oil producers such as Saudi Arabia, Russia, and other allies, announced its first output increase since 2022, set to begin in April. This move came one quarter earlier than Goldman Sachs' initial forecast, which had anticipated output hikes to start in July 2025.

 

Russia’s Deputy Prime Minister Alexander Novak stated that while the April production hike would go forward, OPEC+ might reassess its approach later in the year, potentially cutting supply depending on market conditions.

 

Trump Threatens New Sanctions on Russia Over Ukraine War

 

Adding to the market uncertainty, Donald Trump said in a post on Truth Social that he was "strongly considering" imposing sanctions on Russian banks and tariffs on Russian products due to Moscow’s continued military actions in Ukraine.

 

Oil prices spiked earlier in the day following the announcement, with Brent briefly touching $71.40 per barrel and WTI reaching $68.22 per barrel. However, prices retreated as traders weighed the broader implications of geopolitical risks and potential retaliatory moves by Russia.

 

Market Impact of US Economic Data and Federal Reserve Comments

 

Federal Reserve Chairman Jerome Powell also played a role in market stabilization late on Friday. Powell indicated that the Federal Reserve Board was closely monitoring economic policies under the Trump administration, particularly trade-related decisions that could impact global markets.

 

John Kilduff, a partner at Again Capital LLC, noted that investors were processing multiple developments, including supply adjustments from OPEC and possible US sanctions on Russia. "We’re coming to terms with a lot of issues," Kilduff said, adding that traders were cautious about taking aggressive positions on either side.

 

Meanwhile, US job data released last week showed an uptick in employment figures. However, the unemployment rate edged up to 4.1 pc, and analysts warned that growing uncertainty over trade policies and federal spending cuts could dampen labor market resilience in the coming months.

 

Brent Hits Lowest Level Since December 2021 as US Inventories Surge

 

Brent crude prices hit their lowest levels since December 2021 earlier in the week after data showed a rise in US crude inventories. This increase in stockpiles, coupled with OPEC’s production hike, signaled an oversupplied market, further weighing down oil prices.

 

OPEC confirmed that it would proceed with its planned April output hike, adding 138,000 barrels per day to global supply. Meanwhile, US Treasury Secretary Scott Bessent stated that Washington was committed to reducing Iranian crude exports to minimal levels.

 

US to Intensify Efforts Against Iranian Oil Exports

 

The Trump administration is reportedly considering a plan to inspect Iranian oil tankers at sea, aiming to curb Tehran’s crude exports to zero.

 

Reuters reported on Thursday that the US was exploring new enforcement measures to tighten restrictions on Iran’s oil sales, a move that could add further volatility to global energy markets.

 

US Suspends Tariffs on Canada and Mexico but Keeps Steel and Aluminum Duties

 

In a separate trade development, Trump announced the temporary suspension of 25 pc tariffs on most goods imported from Canada and Mexico until April 2.

 

However, he clarified that steel and aluminum tariffs would still take effect on March 12, reflecting ongoing trade tensions between the North American partners.

 

US-India Trade Relations and Bilateral Agreements

 

Meanwhile, in a significant development in US-India trade relations, Commerce and Industry Minister Piyush Goyal returned from Washington after week-long discussions with his US counterparts.

 

Goyal held talks with US Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick, focusing on a potential bilateral trade agreement between the two nations.

 

During Prime Minister Narendra Modi’s recent visit to Washington, India and the US committed to doubling two-way trade to $500 billion by 2030 and finalizing the first phase of a multi-sector Bilateral Trade Agreement (BTA) by fall of 2025.

 

The US remains one of India’s largest trading partners, with bilateral trade in 2023-24 amounting to $119.71 billion. India recorded exports worth $77.51 billion, while imports stood at $42.19 billion, resulting in a trade surplus of $35.31 billion in favor of New Delhi.

 

Between April 2000 and September 2024, India received $67.8 billion in foreign direct investment (FDI) from the US, highlighting the economic ties between the two countries.