Oil Extends Gain as Russian Supply Tightens, Tariff Concerns Subside
Brent futures surpassed $76 per barrel, extending Monday's 1.6% rally, while West Texas Intermediate (WTI) advanced toward $73 for the third consecutive session. Russian production data indicates continued shortfall relative to OPEC+ quotas.
Despite a volatile start to 2023 due to increased heating demand and US sanctions on Russian oil, prices have declined recently amid escalating trade tensions. However, President Donald Trump's recent 25% tariff on aluminum and steel imports from major suppliers, including Canada and Mexico, has sparked concerns.
"Modeling the impact of tariffs remains challenging," said Chris Weston of Pepperstone Group. "However, short-covering and organic buying suggest a short-term low."
Tightness persists in certain market segments, particularly in the Middle East, where reduced competition has enabled producers to increase prices for Asian customers. Surging natural gas prices in Europe have also made oil a more attractive fuel option, potentially stimulating demand.
Subscribe to Bloomberg's Energy Daily newsletter for industry insights and updates.