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Oil prices have fallen for the third day in a row, and as fears that President Donald Trump’s trade war will slow down economic activity have risen, it has fallen to its lowest level at nearly 3% in three years.
International benchmark Brent crude was low at $68.33 on Wednesday, the lowest since December 2021.
The move comes after the US Energy Information Agency reported an exceeded expected rise in U.S. crude oil stocks, increasing concerns about slowing economic activity after Trump confirmed new trade tariffs in Canada, Mexico and China this week.
Crude oil inventory has risen at 3.6 million barrels over the past week, far surpassing analyst estimates. EIA data was the latest in a set of negative indicators of demand.
“The key concerns for the market at this point are Trump tariffs, retaliation from affected countries, and what will happen next,” said Callum Macpherson, Investec’s head of product. He added that the price “is at risk of deeper corrections.”
Wednesday’s drop added to the losses since surprise when OPEC+ surprised the market by confirming that it would go ahead with a previously delayed plan to pump more crude oil in April by ending years of production cuts. The cartel’s decision means that eight members of the producer group, including Saudi Arabia and Russia, will increase production by combining 120,000 barrels per day in April, adding a total of 2.2mn B/D barrels of 2.2mn over the next 18 months.
OPEC+ has repeatedly cut production volumes in recent years to boost crude oil prices, and regularly ignores calls from the US to increase production to reduce fuel costs, particularly for American consumers.
Three different output cut sets mean that OPEC+ members are producing nearly 6 million b/d of total capacity, representing around 6% of the world’s oil supply.
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Saudi Arabia has played a large part of the cuts to date, reducing its own production by 2 million b/d over the past two years. The Financial Times reported in September that, for the first time in years, Saudi officials were ready to revive production.
Amritacen, the research group’s energy side, said the decline on Wednesday was exacerbated by WTI prices, which fell below the level where U.S. producers purchased put options to hedge their price exposure. “The fear of liquidity and growth has dragged crude oil more than the main price levels and now oppresses the wider sentiment that has sparked even more movement,” she said.
