Oil Prices Drop Over 1% as Trump Urges OPEC to Cut Prices

Oil prices fell by more than 1% on Monday following remarks by U.S. President Donald Trump urging OPEC to reduce oil prices. The announcement came after Trump outlined extensive measures to boost U.S. oil and gas production during his first week in office.

Market Impact

Brent crude futures declined by 87 cents or 1.11% to $77.63 a barrel, while U.S. West Texas Intermediate crude dropped by 89 cents or 1.19% to $73.77 a barrel.

Trump's Call to OPEC

President Trump reiterated his request for OPEC to lower oil prices, arguing that it would harm oil-dependent Russia's finances and contribute to ending the conflict in Ukraine. Trump threatened to impose taxes, tariffs, and sanctions on Russia and other nations involved if a resolution to the Ukraine crisis is not reached promptly.

OPEC Response

To date, OPEC and its allies, including Russia, have not publicly responded to Trump's demands. OPEC+ delegates have cited an existing plan to gradually increase oil production from April onwards.

Market Outlook

Goldman Sachs analysts predict limited impact on Russian oil production, as higher freight rates have encouraged non-sanctioned vessels to transport Russian oil, while discounts on the affected Russian ESPO grade have attracted price-sensitive buyers.

However, JP Morgan analysts note that a risk premium is warranted due to the sanctions affecting approximately 20% of the global Aframax fleet. The application of sanctions on the Russian energy sector could influence future negotiations.

Colombia Trade Disruptions

Additional trade disruptions are possible after Trump announced retaliatory measures against Colombia, including tariffs and sanctions, for refusing entry to two U.S. military aircraft carrying deported migrants. The U.S. is Colombia's primary seaborne crude importer, accounting for 41% of its total exports.

U.S. Oil Imports from Colombia

Data from the Energy Information Administration indicates that the U.S. imported 228,000 barrels per day of crude oil and petroleum products from Colombia in 2023.