Oil prices fell yesterday, marking the largest monthly decline in nearly three and a half years, as Saudi Arabia indicated a plan to increase production and extend its market share, while the global trade war negatively impacted fuel demand projections.
Brent crude futures decreased by $1.13, or 1.76%, settling at $61.94 per barrel. Similarly, U.S. West Texas Intermediate crude futures dropped $2.21, or 3.66%, closing at $58.21—the lowest level since March 2021.
For the month, Brent saw a 15% decrease, and WTI fell by 18%, representing the largest monthly declines since November 2021.
Both benchmarks dropped following Saudi Arabia’s announcement that it would not support the oil market through additional supply cuts and was prepared to endure a prolonged phase of low prices.
Phil Flynn, a senior analyst at Price Futures Group, expressed concerns over the potential for a new production war, questioning whether Saudi Arabia is signaling a return to reclaiming its market share.
Earlier this month, Saudi Arabia advocated for a more significant than anticipated increase in OPEC+ output for May.
According to sources reported by Reuters, several OPEC+ members are expected to propose further output increases for June, with a meeting scheduled for May 5 to discuss these plans.
Raymond James investment strategy analyst Pavel Molchanov noted, “The trade war directly diminishes oil demand and impedes consumer travel. Along with OPEC’s reversal of output cuts, the risk of oversupply is rising.”
On April 2, U.S. President Donald Trump announced tariffs on all imports, prompting retaliatory measures from China and escalating a trade war between the two largest oil-consuming nations.
In a contrasting development, U.S. crude oil stockpiles unexpectedly fell last week due to increased export and refinery demand, which helped mitigate some price declines.
The Energy Information Administration reported a decrease in crude inventories of 2.7 million barrels, bringing the total to 440.4 million barrels for the week ending April 25, which was contrary to analysts’ expectations for a 429,000-barrel increase, as indicated in a Reuters poll.
