Oil prices dip as OPEC agrees to raise output

Oil prices dipped on Monday and WTI price fell from $70.2 to $68.3 per barrel after OPEC announced plans to raise oil output. If oil prices retreat, they may encounter support near $67.0 per barrel, while resistance may be found near $72.2 per barrel.

Oil prices dipped on Monday after the Organization of the Petroleum Exporting Countries (OPEC) announced plans to raise oil output starting in April. The organisation has been using voluntary oil production cuts among its members to limit oil production and keep oil prices high. On Monday, however, the cartel announced that they would raise oil output by 2.2 million barrels a day starting from April, which drove oil prices down. 

US President Donald Trump has been using threats of imposing trade tariffs as a negotiation tool to further his agenda with other countries. Trump has threatened that he will announce reciprocal tariffs on many countries, which would raise US import taxes to match those imposed by the country’s other trading partners. If Trump goes through with these heavy tariffs, global inflation is likely to rise andthe  economic outlook will worsen, putting pressure on oil prices.

Trump’s tariff plans change rapidly, causing confusion and volatility in markets. Trump’s plans of imposing 25% tariffs on Canada and Mexico had been postponed for a month after both countries agreed to tighten border activities. On Monday, however, Trump stated that he intends to go ahead with imposing tariffs on his neighboring countries starting on Tuesday. Trump has also threatened to impose additional 10% tariffs on China on Tuesday, March 4.

US President Donald Trump’s plans to broker a peace treaty between Russia and Ukraine have so far been fruitless. On Friday, Trump had a heated meeting with Ukrainian President Volodymyr Zelenskyy in the White House. The clash confirmed that a peace treaty is not yet on the horizon, propping up oil prices. On Sunday, however, European leaders gathered to discuss the situation in Ukraine. British Prime Minister Keir Starmer stated that European leaders have agreed to draft a peace proposal between Russia and Ukraine and send it to Washington.

Oil prices are kept in check by high central banks’ interest rates. The US Federal Reserve held interest rates steady at its January meeting after delivering three consecutive rate cuts in 2024. FOMC policymakers voted unanimously to maintain the federal funds range to a target range of 4.25% to 4.50%.

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Written by:
Myrsini Giannouli

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