Crude oil futures saw a slight decline during early Wednesday trading in Asia, amid mixed pricing signals and heightened market volatility. As of 0710 GMT, the front-month April 2025 ICE Brent futures were trading at $75.97 per barrel, down from the previous session’s close of $76.20. Similarly, the March 2025 NYMEX WTI was trading at $72.58 per barrel, compared to Tuesday’s settle of $72.70.
Trade War Concerns Continue to Dominate
A major factor driving the lower crude prices was the growing concerns over an extended trade war between the US and China. The tit-for-tat tariffs between the two countries had caused a dip in prices, reaching three-week lows in the prior session. The ongoing trade tensions raised fears about global demand, particularly in China, which has become increasingly dependent on exports amid weak domestic consumer confidence.
Iranian Oil Exports: A Key Market Factor
Crude oil prices received some support as reports surfaced that US President Donald Trump was preparing to clamp down on Iranian oil exports. On Tuesday, Trump signed an executive order aimed at imposing “maximum pressure” on Iran. This move is expected to target Iranian oil exports unless Tehran agrees to a deal restricting its nuclear ambitions. Despite the downward pressure from trade war fears, this action on Iran added some upward momentum to oil benchmarks.
US Tariff Policy and Its Impact on Oil Prices
While the 25% tariffs on Mexican and Canadian imports were postponed for 30 days, softening the immediate impact on US crude and fuel prices, the broader trade dispute between the US and China overshadowed this positive development. According to Ole S. Hansen, Head of Commodity Strategy at Saxo Group, the trade dispute raised concerns about demand, particularly in China, where weak domestic consumer confidence and a reliance on exports are key factors in the outlook for oil consumption.
US Crude Stockpiles and Market Sentiment
In addition to trade concerns, the US commercial crude stockpiles increased by over 5 million barrels last week, as reported by the American Petroleum Institute (API). This includes an additional 100,000 barrels at the critical oil delivery hub in Cushing, Oklahoma, further weighing on market sentiment. However, the API also reported a nearly 7 million-barrel drop in US distillates stocks, attributed to winter storms, which helped offset a near 5.5 million-barrel increase in gasoline stocks.
Conclusion
Crude oil prices remain volatile as they are influenced by a combination of geopolitical tensions, trade concerns, and supply data. While the US’s stance on Iranian oil exports may provide some support to prices, the ongoing trade dispute with China continues to overshadow the market, particularly given its potential impact on global demand. Market participants will need to closely monitor developments on both fronts, as well as inventory data, to gauge the direction of crude prices in the near term.
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