On Wednesday, oil prices fell by 3% as reports indicated that OPEC+ might consider fast-tracking its oil output increases in June. However, the declines were moderated after news emerged that U.S. President Donald Trump could potentially lower tariffs on imports from China.
Brent crude futures were down by $1.92, or 2.85%, reaching $65.52 by 1:42 p.m. EDT (1742 GMT), while U.S. West Texas Intermediate crude saw a drop of $1.99, or 3.13%, bringing it to $61.68.
According to three individuals familiar with OPEC+ discussions, several member nations are likely to propose increasing oil output for a second consecutive month in June.
Recent disputes over production compliance have created tensions among OPEC+ members.
“It’s not surprising that OPEC wants to boost production. This raises questions about the group’s unity. They may be growing weary of limiting output,” stated Phil Flynn, an analyst at Price Futures Group.
Earlier in the session, Brent traded as high as $68.65 per barrel, the peak since April 4. Following the OPEC+ news, both benchmarks saw declines of over $2.
In the early afternoon, futures recouped some losses after Kazakhstan’s Energy Minister Erlan Akkenzhenov commented that the country is fulfilling its OPEC+ obligations and collaborating with other members to find “mutually acceptable solutions” regarding oil production management.
Akkenzhenov previously emphasized that Kazakhstan would prioritize its national interests when determining output levels, a stance that has caused frustration among other OPEC+ nations due to its overshooting of the assigned quota.
According to the Energy Information Administration (EIA), U.S. crude oil stockpiles increased, while gasoline and distillate inventories experienced more significant-than-expected declines last week.
Crude stock levels rose by 244,000 barrels to a total of 443.1 million barrels for the week ending April 18, as reported by the EIA. This increase contrasts with analysts’ predictions that expected a draw of 770,000 barrels.
Possibility of Tariff Reductions
Updates regarding trade tariffs mitigated some of the losses in oil prices. A source revealed on Wednesday that the Trump administration is considering reducing tariffs on Chinese imports in light of ongoing discussions with Beijing, indicating that any decisions made would not occur unilaterally.
Reportedly, tariffs on China could decrease to between 50% and 65%, according to a Wall Street Journal article citing a White House official.
U.S. Treasury Secretary Scott Bessent mentioned that excessively high tariffs between the U.S. and China will need to be lowered before trade negotiations can resume.
Trump has also stepped back from the idea of dismissing Federal Reserve Chair Jerome Powell after several days of criticizing the Fed for not lowering interest rates, which has eased investor anxiety regarding economic instability.
The U.S. has imposed new sanctions against an Iranian shipping executive whose network is involved in transporting liquefied petroleum gas and crude oil from Iran, valued at hundreds of millions of dollars.