Oil prices increased by 1% on Wednesday, driven by a weaker US dollar. However, concerns over an economic slowdown in the United States and the impact of global trade tariffs kept gains in check.
Oil Prices Rise on Dollar Decline
As of 1300 GMT, Brent crude futures gained 75 cents (1.08%), reaching $70.31 per barrel, while US West Texas Intermediate (WTI) crude climbed 82 cents (1.24%) to $67.07 per barrel.
A decline in the US dollar to a five-month low made oil more affordable for international buyers, boosting demand. Analysts from UBS and Phillip Nova highlighted that the Energy Information Administration (EIA) revised its earlier market forecasts, easing concerns about an oversupply of crude.
Economic Slowdown and Tariff Uncertainty Limit Oil Price Gains
Despite the upward trend, oil prices faced pressure due to fears of a US recession and ongoing trade tensions. The US government’s tariff policies have become a key factor influencing market sentiment, with several measures already in place and others pending implementation.
Market analysts warn that increasing tariffs could raise inflation, elevate business costs, and weaken consumer confidence, slowing economic growth.
“Concerns over a potential US recession, stock market volatility, and uncertainty surrounding trade policies are contributing to market instability, capping oil’s growth potential,” said Hassan Fawaz, Chairman of brokerage GivTrade.
OPEC Maintains Demand Projections
The Organization of the Petroleum Exporting Countries (OPEC) reaffirmed its 2025 global oil demand forecast, citing steady growth in road and air travel.
Despite the challenges posed by tariffs, OPEC anticipates economic stabilization. The group also reported a production increase of 363,000 barrels per day (bpd) in February, primarily driven by Kazakhstan’s higher output, despite difficulties in adhering to OPEC+ production quotas.
US Oil Production and Inventory Trends
On the supply front, the US Energy Information Administration (EIA) adjusted its 2025 crude oil production estimates, forecasting an average of 13.61 million bpd—higher than previous projections.
Additionally, the American Petroleum Institute (API) reported a rise in US crude stockpiles by 4.2 million barrels for the week ending March 7, while gasoline inventories declined by 4.6 million barrels.
Market Outlook
Traders now await official US government stockpile data, set for release later today, which could provide further insights into market direction. While the weaker dollar and supply adjustments support oil prices, economic and trade uncertainties may continue to limit gains in the near future.
