Oil News: Bearish Outlook as Tariff Concerns and Iraqi Exports Pressure Prices

Light Crude Oil Futures Dip as Traders Brace for Volatility

Light crude oil futures traded lower on Friday, hovering within Thursday’s range, highlighting trader indecision and the potential for increased volatility. Key resistance levels at $70.35 (Fibonacci level) and $70.59 (200-day moving average) are capping gains. A decisive break above this range could ignite a rally targeting the 50-day moving average and pivot levels at $72.02 and $72.08, respectively.

On the flip side, sustained trading below the retracement zone and the 200-day moving average may attract strong sellers, potentially pushing prices to this week’s low at $68.36. Breaching this level could open the door to a deeper decline with $67.06 as the next major support.

At 11:11 GMT, Light Crude Oil Futures are trading $69.34, down $1.01 or -1.44%.

Tariff Concerns and Iraq’s Export Resumption Weigh on Oil Prices

Oil prices slipped 1% on Friday, with both Brent and WTI benchmarks poised for their first monthly drop since November. The market is reacting to U.S. tariff threats and Iraq’s decision to resume oil exports from the Kurdistan region. Iraq’s oil ministry announced plans to export 185,000 barrels per day (bpd) through state marketer SOMO, with volumes expected to increase gradually.

This development raises compliance concerns regarding Iraq’s OPEC+ commitments, as noted by Onyx Capital Group’s Harry Tchilinguirian. Should OPEC+ delay the return of 120,000 bpd of voluntary cuts in April, Iraq’s increased output might offset these measures, adding to supply pressures.

Trump’s Tariff Moves Add to Market Uncertainty

Investor sentiment has also been dampened by U.S. President Donald Trump’s tariff announcements. Effective March 4, a 25% tariff on Mexican and Canadian goods and an additional 10% duty on Chinese imports will be implemented. The tariff escalation raises concerns about global demand, with Ole Hansen of Saxo Bank warning of potential impacts on growth, inflation, and crude oil consumption.

Expectations of a U.S. economic slowdown, alongside the potential for increased Russian oil supply if peace talks in Ukraine progress, are further curbing risk appetite. Additional pressure stems from higher-than-expected U.S. jobless claims and signs of slowing economic growth in the fourth quarter.

Saudi Arabia May Cut April Oil Prices for Asia

Saudi Arabia, the world’s largest oil exporter, may slightly reduce its official selling prices (OSP) for April crude shipments to Asia. Traders surveyed by Reuters anticipate cuts of 20 to 65 cents per barrel for Arab Light crude, setting April prices at a premium of $3.25 to $3.70 per barrel against the Oman/Dubai average, down from March’s $3.90 premium.

The anticipated price adjustments reflect marginal declines in benchmark prices and weakened refining margins in Asia. With China poised to boost imports of Russian and Iranian oil in March, demand for Saudi crude might face additional headwinds.

Market Forecast: Bearish Outlook as Risks Accumulate

The crude oil market appears poised for further downside pressure. Key technical levels suggest that unless prices break above the $70.59 resistance, sellers could push futures toward $67.06.

The macroeconomic backdrop, including heightened tariff tensions, potential increases in Iraqi and Russian oil supplies, and softer demand in Asia, points to a bearish outlook.

Traders should watch for a weekly close above $70.40, which could signal potential short-term support, but the broader sentiment remains cautious.

More Information in our Economic Calendar.