Oil prices fall to 12-week low on OPEC+ output increase

Oil prices fell to a 12-week low on Monday amid reports that the Organization of the Petroleum Exporting Countries and its allies (OPEC+) will proceed with a planned oil output increase in April and concerns that U.S. tariffs could impede global economic growth and diminish oil demand, agencies reported.

Brent futures decreased by $1.19, or 1.6%, settling at $71.62 a barrel. U.S. West Texas Intermediate (WTI) crude fell by $1.39, or 2.0%, settling at $68.37 a barrel. These were the lowest closing prices for Brent since Dec. 6 and WTI since Dec. 9.

Three sources from the producer group told Reuters on Monday that OPEC+ decided to proceed with its planned April oil output increase.

Since 2022, OPEC+ has been reducing output by 5.85 million barrels per day, approximately 5.7% of global supply, in a series of steps to support the market.

The United Kingdom announced that several proposals had been made for a truce in the ongoing conflict between Ukraine and Russia. France proposed a one-month pause to facilitate peace talks, while U.S. President Donald Trump indicated his patience was wearing thin.

Meanwhile, the U.S. is drafting a plan to potentially grant Russia sanctions relief as Trump seeks to restore relations with Moscow and end the war in Ukraine. Russia, the third-largest oil producer behind the U.S. and Saudi Arabia, is a member of OPEC+.

On the trade front, Trump is set to decide on Monday regarding the levels of tariffs the U.S. will impose on Canada and Mexico, amid last-minute negotiations over border security and efforts to curb the inflow of fentanyl opioids.

Analysts have noted that Trump's planned tariffs have heightened inflation concerns at the U.S. Federal Reserve. This could prompt the Fed to maintain higher interest rates for a longer period, potentially slowing economic growth and energy demand.