Oil prices fell by about 2% due to OPEC+production plans and concerns about US tariffs, hitting a new 12 week low. Short term bearish sentiment is further released, and caution should be exercised against accelerating the downward trend under the dual killing of fundamental supply and demand.

Ukraine's military aid suspended, market expects Russian oil supply to increase

The Trump administration confirmed on Monday the suspension of all military aid to Ukraine, following disagreements with Ukrainian President Zelensky during talks at the White House.

The market believes that the cooling of the US Ukraine relationship may signal the easing of the Russia-Ukraine conflict, and may prompt the United States to relax sanctions against Russia, thus increasing the Russian oil supply in the global market.

According to sources, the White House has requested the State Department and the Treasury Department to draft a possible list of relaxed sanctions for US officials to discuss with Russian representatives in the coming days.

However, Goldman Sachs analysts point out that Russia's oil supply is more constrained by OPEC+production targets rather than Western sanctions, and even if sanctions are relaxed, the increase in Russian oil supply may be limited.

OPEC+Production Increase Decision Further Pressures Oil Prices

OPEC+announced that it will increase production by 138000 barrels per day starting from April, marking the first increase in production since 2022. The market is concerned that this may exacerbate the imbalance between crude oil supply and demand, further lowering oil prices.

Under the combined influence of OPEC+production increase and US tariff policies, the sentiment in the crude oil market has deteriorated.

US tariffs impact energy market

The Trump administration will officially impose a 25% tariff on imported goods from Canada and Mexico this week, and a 10% tariff on Canadian energy products. In addition, the US tariffs on imported goods from major Asian countries will also increase from 10% to 20%.

Analysts predict that these tariff measures will suppress economic activity, reduce fuel demand, and put greater pressure on crude oil prices.

Market participants are working hard to assess the impact of the series of energy related policies introduced by the Trump administration this month. However, currently, the negative impact of tariff policies on oil prices dominates. "- BMI analyst

Editor's viewpoint: Policy uncertainty intensifies, short-term pressure on oil prices

Recently, frequent policy adjustments by the United States, including the suspension of military aid to Ukraine, potential negotiations with Russia, and the implementation of a new round of tariffs, have made it difficult for the market to predict its long-term direction.

Against the backdrop of OPEC+production increase, weakened global demand expectations, and rising trade concerns, oil prices still face downward pressure in the short term. Continuous attention should be paid to geopolitical dynamics and global economic growth prospects to determine the next trend of the oil market.