Brent crude hit lowest level since August 2021 amid trade war and OPEC+ uncertainty

Brent crude prices dropped below $68 per barrel, marking the lowest level since August 2021, amidst ongoing tensions from the U.S.-China trade war and uncertainty surrounding OPEC+ output, agencies reported.

Oil prices declined for the third consecutive day following a larger-than-expected increase in U.S. crude oil stocks, fueling concerns about the potential return of more OPEC+ barrels to the market.

The U.S. Energy Information Administration (EIA) reported that crude inventories rose by 3.6 million barrels to 433.8 million barrels in the week ending February 28, far exceeding analysts' expectations for a 341,000-barrel increase. Meanwhile, gasoline and distillate inventories fell.

The imposition of tariffs on China, Canada, and Mexico by the U.S. sparked swift reprisals from each nation, increasing concerns over a slowdown in economic growth and the consequent impact on energy demand, according to analysts.

On Monday, a statement posted on OPEC's website revealed that Saudi Arabia, Russia, the United Arab Emirates, Iraq, Kuwait, Kazakhstan, Oman, and Algeria will begin unwinding a 2.2 million barrel per day cut starting in April. The press release stressed that the return of oil "may be paused or reversed subject to market conditions."

"There is a bit of concern in the market that the OPEC+ decision is the start of a series of more monthly supply additions," said an OPEC+ representative. "But the statement reiterates an approach in bringing back barrels only if the market can absorb them."

Last week, Standard Chartered predicted that the path of least resistance for oil prices is lower in the short term. Market technicals have turned relatively bearish in the very short term, and most machine-learning or AI models have also turned short-term bearish.

Furthermore, the annual London International Energy (IE) Week round of research, consultant, and trader events appears to have accentuated the negative outlook for the oil market. In previous years, the mood of the week has often been self-reinforcing.