Oil Extends Losing Streak on Tariff Uncertainty
Crude oil prices extended their decline from Tuesday following remarks by the U.S. Commerce Secretary that some tariffs on Mexico and Canada could be rolled back, boosting uncertainty. The news that OPEC+ had decided to go ahead with its April wind-down of production cuts also continued to weigh on prices, after plunging them lower earlier this week. At the time of writing, Brent crude was trading at $70.87 per barrel, with West Texas Intermediate at $67.75 per barrel, both down from opening. The “OPEC+ decision to start increasing production again is a materially bearish development, loosening markets at a time that U.S. macro data are starting to soften,” Citi analysts said in a note quoted by Reuters. OPEC+ will boost combined production by some 138,000 bpd from April—a small portion of its total cuts that are close to a million barrels daily. Also weighing on prices is sentiment among traders, who suspect the tariff war President Trump started against the largest trade partners of the U.S. could extend in time. “Canada is bunkering down for a fight,” a regional executive at UBS told Bloomberg. “The real risk is this thing gets drawn out,” Wayne Gordon, regional chief investment officer at the bank said. The Trump administration imposed a 25% import levy on all Mexican imports, beginning Tuesday, along with a 25% tariff on all Canadian imports excluding energy, which got a discount of 15% for a 10% tariff rate. Canada retaliated quickly enough. The retaliation began with 25% on $107 billion worth of American goods – starting with tariffs on $20.8 billion worth of goods immediately, and tariffs on the remaining $6.6 billion on American products in 21 days’ time, Canadian Prime Minister Justin Trudeau said Tuesday. “Our tariffs will remain in place until the U.S. trade action is withdrawn, and should U.S. tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures,” Trudeau also said. GasBuddy reported later in the day that it expects prices at the pump to rise as a result of the tariff exchange.
China Urges Refiners to Switch From Fuels to Petrochemicals
Chinese refiners should reduce fuel production in favor of more petrochemicals, the country’s central planning agency said in its annual report. “We will advance petrochemical industries toward fine chemical industries by cutting the output of refined petroleum products, increasing the output of chemical products, and enhancing quality,” the National Development and Reform Commission said, as quoted by Bloomberg. China’s demand for fuels has been undermined by the surge in EV sales in recent years and the introduction of LNG-powered trucks, which may have led to a peak in diesel demand, according to Sinopec. The state energy major said that diesel demand may have peaked back in 2019, and gasoline demand could have reached its highest ever in 2023. According to the International Energy Agency, all fuel demand in China may have already peaked. The agency cited 2024 that showed the consumption of gasoline, gasoil, and jet fuel in China had averaged 8.1 million barrels daily. This was 200,000 bpd lower than the average daily consumption of the three fuels in 2021—but it was marginally higher than 2019 demand levels. Weaker oil imports so far this year seem to support the view that oil demand in the world’s largest importer may be peaking. However, it seems that the reason for the import weakness is not so much organic demand as prices, driven higher by the Biden administration’s parting sanction volley at Russia. The Biden sanctions on Russian oil trade and shadow fleet crippled the supply of ESPO crude, which has been a favorite with Chinese refiners. Yet the scores of oil tankers sanctioned by the U.S. slashed the availability of non-sanctioned tankers to ship the crude to China and that led to significantly higher transportation costs that sapped demand for the crude and ultimately contributed to lower crude oil imports.
Reliance Industries says oil ministry raised $2.81 billion demand in gas dispute case
Reliance Industries Limited (RIL) said on Tuesday the country’s Petroleum and Natural Gas Ministry has raised a demand of $2.81 billion from the company, BP Exploration and Niko in a gas drilling dispute case. On February 14, a division bench at Delhi High Court ruled against Reliance and its partners in a dispute regarding extraction of gas in a deepwater field in India’s KG D6 block in the Krishna Godavari basin in the country’s eastern coast. In a regulatory filing, RIL informed, “The Company had won arbitral award issued by an eminent international arbitration panel on July 24, 2018 against the Government of India’s (GOI’s) claim on the KG-D6 Consortium for an amount of approximately US $1.55 billion on account of alleged gas migration from ONGC’s blocks. A single judge of the Hon’ble Delhi High Court, on May 09, 2023, dismissed the GOI’s appeal challenging the arbitral award. GOI had filed an appeal before the Division Bench of the Hon’ble Delhi High Court.” However, it added, following the government’s appeal to a Division Bench, the court reversed the earlier ruling in a judgment delivered on March 3, 2025. Reliance, meanwhile, is planning to challenge the latest ruling in the courts. “The Company is taking steps to challenge the judgment of Division Bench of Hon’ble Delhi High Court. The Company does not expect any liability on this account,” it said in the exchange filing.
Why Analysts Think Oil Prices Will Remain Subdued
Oil prices will likely remain around current levels or even lower this year, analysts and economists in the monthly Reuters poll said last week. Sufficient oil supply and spare capacity within the OPEC+ group will be enough to keep prices in the low $70s per barrel, the experts said. Supply shocks would be balanced out with the 5 million barrels per day (bpd) of spare capacity that OPEC+ currently has, mostly within the Middle Eastern producers in OPEC. Major trade and geopolitical developments since last week are likely to put additional downward pressure on oil prices—the tariffs on Canada and Mexico and the higher tariff on Chinese imports into the U.S., and the possibility of some eased sanctions on Russia. The four dozen analysts participating in the Reuters poll last week saw Brent Crude prices averaging $74.63 per barrel in 2025, slightly higher compared to the forecast of $74.57 in January. For WTI Crude, analysts expect an average 2025 price of $70.66 per barrel, up from $70.40 in January. At the time the survey was carried out, oil prices were more or less trading around these levels. But early this week, oil slumped after the Trump Administration confirmed that tariffs on Canada and Mexico are going ahead as planned on March 4, and the tariff on Chinese goods is lifted to 20% from 10%. Canada and Mexico tariffs are at 25%, with Canadian energy facing a lower, 10%, import tariff. Economic Fallout from Tariffs On the first trading day of March, major Wall Street indexes turned sharply lower after the Trump Administration announced that the tariffs on Canada and Mexico, and higher levies on China are going into effect on Tuesday. The S&P 500 index fell by nearly 2% for the steepest one-day drop so far this year. The broad-based index has erased nearly all the 6% gain since Election Day and is now only 1% higher compared to early November when President Donald Trump was elected. The Dow Jones Industrial Average (DJIA) slumped by 1.5%, and the Nasdaq composite dipped by 2.6%. The rally in the weeks since November has been largely due to hopes that the Trump Administration would boost U.S. businesses and the economy. But tariffs could undermine the growth plans of many businesses, and the economy is likely to slow down, analysts say. A weakening economy, the world’s largest at that, could dampen oil demand in the U.S. and globally—that’s why the market hasn’t been very bullish about oil prices in recent weeks. Some estimates have even started to point to the U.S. economy contracting in the first quarter. The GDPNow model of Atlanta Fed, not an official forecast but a running estimate of real GDP growth based on available economic data, shows a forecast of real annual GDP growth for Q1 at a negative -2.8% on March 3, down from a -1.5% forecast on February 28. The estimate was revised down after releases from the US Census Bureau and the Institute for Supply Management. The GDPNow forecast of first-quarter real personal consumption expenditures growth and real private fixed investment growth fell from 1.3% and 3.5%, respectively, to 0.0% and 0.1%.
GAIL issues tender seeking nine LNG cargoes, say sources
GAIL (India) has issued a tender seeking nine cargoes of liquefied natural gas (LNG) to be delivered over three years, two industry sources said on Tuesday. India’s largest gas distributor is seeking three LNG cargoes for delivery on May 16-22, June 6-12 and July 1-7 this year, with submissions due on March 7. It is also seeking six LNG cargoes in two shipments, with delivery dates of April 24-30, May 16-22 and June 1-7 in 2026 and the same dates in 2027, with submissions due on March 27.