Oil markets are ‘trading sideways’ this week, moving between gains and losses without a clear trend following seven straight weekly declines since Donald Trump took office on January 20, this year, driven by concerns of economic slowdown due a trade war instigated by the Trump administration.
However, that trend has halted as oil has gained some support over recent days from what appears to be a renewed geo-political risk from rising tensions in the Middle East, there is concern it could lead to disruption of supplies from the region.
The US launched strikes on Yemen's Houthi rebels, and the conflict could escalate into a direct conflict between the US and Iran, naturally any escalation would risk trades through the Strait of Hormuz, controlled by Iran and accounting for more than 20 per cent of global seaborne oil trade.
Conversely, the market balance could turn into a supply glut due to OPEC+ plans to restore production. Crude has fallen more than $13 a barrel from this year’s high in January, influenced by Trump’s escalating trade war, an OPEC+ decision to increase supply, and a possible end to the war in Ukraine that would return Russian barrels to the market, meanwhile Global economic news remains mixed for crude prices.
If OPEC+ fulfils its plan to boost supply every month until September 2026, the cartel would add more than 2 million barrels a day, enough to meet all the incremental demand expected in 2025 and the following year. However, non-OPEC producers are expected to add around 1.5 million barrels per day during this phase, potentially switching the market balance into a glut which can send prices lower in the medium term. OPEC+ increased its production for a second straight month in February, reaching 34.13 million barrels per day.
The Bank of England and the US Fed both held interest rates this week, as they lowered growth projections, raised inflation targets, and revised unemployment figures. Most importantly, it focused on the increased uncertainty around the economic outlook, indicating a dovish stance.
US economic data showed signs of soaring inflation, with import prices up by 0.4 per cent in February. Prices of imported goods from China, which were subject to higher import tariffs that month, rose 0.5 per cent, the steepest increase in almost three years, potentially impacting US consumer demand in the coming months.
Meanwhile, China’s February industrial production rose by 5.9 per cent year-to-date, stronger than expectations of 5.3 per cent. Additionally, China’s February retail sales increased by 4.0 per cent year-to-date, exceeding expectations of 3.8 per cent.
Fuel cards prices remain similar to this current week, showing a small drop in the region of .10- .20 pence per litre depending on card type.
