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(Bloomberg) -- Oil extended losses from the lowest in almost three months after OPEC+ signaled plans to revive halted production, just as the Trump administration threatens trade wars on multiple fronts.
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Brent fell toward $71 a barrel after losing 1.6% on Monday, while West Texas Intermediate was near $68. In a surprise move, the producer group will start increasing output in April following repeated delays, though OPEC+ said the boost could be paused or reversed subject to market conditions.
Global oil markets face a supply surplus this year even if OPEC+ keeps output flat, the International Energy Agency said in a report last month. The cartel, led by Saudi Arabia and Russia, plans to increase production by 138,000 barrels a day, according to a statement posted on its website.
Crude has trended lower since mid-January on concerns about lackluster demand and the fallout from President Donald Trump’s trade policies. US tariffs on its trading partners — China, Canada and Mexico — come into effect on Tuesday, and the market will be watching for any retaliatory measures.
“Oil is under pressure on two fronts,” said Warren Patterson, Singapore-based head of commodities strategy for ING Groep NV, citing the supply boost from OPEC+ and US levies. Retaliatory tariffs mean “likely further escalation, which will only further cloud the growth and demand outlook.”
China will adopt necessary countermeasures to defends its rights and interests against US tariffs, the Ministry of Commerce said in a statement, while Canada’s foreign minister said the nation has prepared a sweeping package of counter-tariffs against US-made products.
Trump’s executive order calls for 25% levies against most of what the US imports from Canada and Mexico, and 10% on Canadian energy such as crude. While Mexico could reroute flows to Asia and Europe, Canada is, by most measures, stuck with selling the majority of its oil to American refiners.
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