Oil logs third weekly gain after US tariffs put pressure on Venezuelan crude; Brent, WTI gain 6-7% in March

Oil Prices Today: Crude oil prices declined in the previous session, dragged by worries that US tariff wars could spark a global recession, but gained for a third consecutive week after the US ratcheted up pressure on the Organisation of Petroleum Exporting Countries (OPEC) members Venezuela and Iran.

Brent crude futures fell 40 cents, or 0.5 per cent, to settle at $73.63 a barrel. US West Texas Intermediate crude futures (WTI) fell 56 cents, or 0.8 per cent, to close at $69.36 a barrel. On a weekly basis, Brent futures gained 1.9 per cent, while WTI rose 1.6 per cent.

Since hitting multi-month lows in early March, Brent has been up more than seven per cent, and WTI has rebounded over six per cent. US President Donald Trump will announce reciprocal tariffs on a wide range of imports, effective April 2. The trade war has investors worried about a potential recession.

Also Read: Crude oil outlook: Goldman Sachs lowers Brent year-end forecast by $5 on subdued demand, higher OPEC+ supply

Why did oil prices recover 6-7% in March?

-"Concerns about a trade war, coupled with elevated US policy uncertainty, weigh heavily on sentiment. Although recession risk was elevated, high-frequency oil demand indicators have held up relatively well for now, JPMorgan noted.

-Mid-week data from the Energy Information Administration showed US crude inventories fell by 3.3 million barrels to 433.6 million barrels last week. "The key theme this week was the Trump administration ratcheting up the pressure on the Maduro regime in Venezuela," said Barclays analysts.

-On Monday, Trump announced new 25 per cent tariffs on potential buyers of Venezuelan crude oil, days after US sanctions targeted China's imports from Iran. Analysts say the measures could exacerbate an anticipated 200,000 barrel-per-day decline in Venezuelan crude oil output this year.

-It has compounded uncertainty for buyers, and the trade of Venezuelan oil to top buyers in China has stalled. Elsewhere, Reliance Industries, operator of the world's biggest refining complex, will halt Venezuelan oil imports.

-Oil markets are readjusting global supply expectations due to US sanctions against Venezuela and Iran. Trump has promised to drive the latter's oil exports to zero. Since Trump's return to the White House, the US has issued four rounds of sanctions targeting Iran's oil sales.

Also Read: India’s crude oil imports rise from Africa, Latin America in February amid US sanctions on Russian supply

-Analysts say that if there were reductions in Venezuelan or Iranian crude oil barrels on the market, this would certainly be a bullish development. The OPEC and its allies (OPEC+) group is set to begin its monthly increases in oil production in April. The group, which comprises OPEC and allies led by Russia, will likely continue to raise oil output in May 2025.

Where are oil prices headed?

According to analysts, crude oil stocks in the US unexpectedly fell last week, supporting oil prices. Tight global supply due to US tariffs on Venezuela’s oil and gas purchases and sanctions on Iranian oil also support oil prices.

Also Read: Donald Trump to impose sharp tariff on India, China for buying Venezuelan oil

"The US President’s 25 per cent trade tariff on foreign-made automobiles could hurt crude oil demand and limit gains. We expect crude oil prices to remain volatile. Crude oil has support at $68.90-68.20, and resistance is at $70.50-71.20. In INR crude oil has support at ₹5,920-5,850 while resistance at ₹6,060-6,130," said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts, consider individual risk tolerance, and conduct thorough research before making investment decisions, as market conditions can change rapidly, and individual circumstances may vary.