In the early trading hours of Friday in Asia, West Texas Intermediate (WTI) crude oil prices climbed to approximately $69.70, marking a one-month high. This increase is largely attributed to recent geopolitical tensions and decisions regarding Venezuelan oil exports, as the threat of tariffs from the United States appears to be influencing market dynamics.
Recently, the United States government imposed a 25% secondary tariff on nations that engage in purchasing oil or gas from Venezuela, a move set to take effect on April 2. In 2024, the US imported around $5.6 billion worth of oil and gas from Venezuela, positioning the country as a significant supplier to the American market, according to trade data from the Commerce Department.
Contributing to the upward pressure on prices is a significant decrease in crude oil inventories. According to the latest report from the US Energy Information Administration (EIA), crude oil stockpiles fell by 3.341 million barrels for the week ending March 21, contrasting with a prior rise of 1.745 million barrels the week before. Market analysts had anticipated a decline of only 1.6 million barrels, highlighting a more substantial tightening in supply than expected.
Despite these supportive factors, there are growing concerns that the impending automobile tariffs announced by the President will negatively impact oil demand. The tariffs on imported cars and light trucks are set to begin on April 2, with additional tariffs on auto parts starting on May 3. Such measures introduce uncertainty into the market, as they may dampen consumer spending and economic activity, ultimately affecting oil consumption. Consequently, while current prices reflect upward momentum, potential economic headwinds pose a risk for the future trajectory of WTI crude oil prices.
