Morning Highlights: Oil Prices Slip Further as Market Remains in Grip of Tariff Fear

Market Snapshot (as of 06:25 EST)

📉 Brent Crude: $64.95/b (−$0.91, −1.38%)

📉 WTI Crude: $61.28/b (−$0.77, −1.24%)

🔹 Oil prices fall for a second day as trade tensions dampen demand outlook.

🔹 U.S.–China negotiations stall, fueling global recession fears.

🔹 Barclays cuts Brent forecast by $4 to $70 for 2025.

🔹 OPEC+ members may push for a faster output increase in June.

🔹 Iberian refinery shutdowns briefly added pressure.

🔹 U.S.-Iran nuclear talks progress, increasing the chance of sanction relief.

🔹 U.S. crude inventories expected to rise modestly.

________________________________________

Market Drivers

1. Trade War Dampens Demand Outlook

2.

• Stalled U.S.–China trade negotiations drive recession fears.

• Tariffs on all U.S. imports now a real possibility, per Trump policy signals.

• Reuters poll: Majority of economists now expect a global recession in 2025.

• Investor reaction: Weakened sentiment across commodities and equities.

📢 "Stalling negotiations between China and the U.S. on trade raises anxiety levels on economic and demand growth prospects once again," said PVM’s Tamas Varga.

________________________________________

3. Barclays Lowers Oil Forecasts

• Brent crude forecast for 2025 revised down to $70 (−$4).

• Reasons cited:

o Persistent trade war fears.

o Emerging 1 million bpd global surplus.

o OPEC+ production pivot.

________________________________________

4. OPEC+ Output Pressure Builds

• Sources say more OPEC+ members will propose accelerating output hikes in June.

• If approved, this would be the second consecutive monthly increase.

• Market bracing for potential supply-side drag on prices.

________________________________________

5. U.S.–Iran Talks Show Progress

• Diplomats cite “incremental progress” in recent rounds.

• Renewed hopes for sanctions relief on Iranian crude exports.

• Traders adjusting to increased odds of more oil supply from Tehran.

________________________________________

6. Inventory and Outage Updates

• U.S. crude stockpiles expected to rise by ~500,000 barrels, per Reuters poll.

• API inventory report due Tuesday evening.

• Spain’s refinery disruptions from power blackout largely resolved by Tuesday morning.

📢 "With 99% of the grid back online, refinery activity should normalize quickly," said Red Electrica.

________________________________________

Outlook: Key Risks and Signals

Risk Factor Bullish if... Bearish if...

Trade Talks: Talks resume, tariffs ease- Stalemate continues, rhetoric escalates

OPEC+ Meeting (May 5): Output hike is small and temporary - Group accelerates supply hikes

Iran Sanctions: Talks stall or fail- Nuclear deal revives Iranian oil exports

________________________________________

📌 Brent has lost nearly $3 over the past two sessions. The market remains trapped between weakening demand sentiment and rising supply risks. Any movement on the trade or sanctions front could swing momentum quickly.