By Humeyra Ayaz
Oil prices declined on Tuesday after OPEC+ reaffirmed its decision to gradually increase production starting in April 2025, easing supply concerns.
The international benchmark Brent crude decreased by 0.6%, trading at $70.80 per barrel at 10:42 a.m. local time (0742 GMT), down from $71.28 at the close of the previous session.
The US benchmark West Texas Intermediate declined by 0.7%, settling at $67.63 per barrel, compared to its prior session close of $68.10.
Oil prices continued to drop as global supply concerns eased after the OPEC+ group, which consists of the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers, announced that they would stick to their decision to gradually increase production starting in April.
On Monday, the eight OPEC+ member countries implementing the production cuts held an online meeting and agreed that voluntary production cuts will be maintained by April 2025. This will be the first production increase by the OPEC+ group since 2022.
At the 38th OPEC and non-OPEC Ministerial Meeting last year, the group decided to extend the voluntary production cut of 2.2 million barrels per day, implemented by Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman, until the end of March 2025.
The countries plan to gradually phase out this output cut from April 2025 to September 2026.
Meanwhile, new US tariffs on imports from Canada, Mexico, and China heightened fears of a trade war, which could slow economic growth and reduce energy demand.
US President Donald Trump's 25% tariffs on imports from Canada and Mexico are set to take effect today.
Trump also stated that large quantities of fentanyl are flowing from China to the US and announced that an additional 10% tariff will be imposed on goods imported from China.
Additionally, reciprocal tariffs are expected to begin on April 2.
In response to Washington's decision, Canadian Prime Minister Justin Trudeau announced that Canada would also impose a 25% tariff on products imported from the US, starting today.
Economists warn that these tariffs will slow economic growth and curb energy demand in the short term, while in the long term they could hurt global growth and spark a new trade war.