WTI crude holds near $70 as supply risks and trade tensions shape oil market outlook
WTI crude trades at a one-month high near $70 amid tariffs and inventory declines
West Texas Intermediate (WTI) crude oil hovered near $70 per barrel on Friday, marking a four-week high and positioning for a third straight weekly gain. The rally has been underpinned by a mix of geopolitical developments and robust inventory data, though looming trade disruptions continue to cloud the demand outlook.
Earlier this week, the United States imposed a 25% tariff on countries purchasing oil from Venezuela, a move aimed at curbing trade with one of Washington’s long-sanctioned exporters. In response, India’s Reliance Industries—operator of the world’s largest refining complex—reportedly plans to halt imports of Venezuelan crude, signaling further tightening of global oil flows. The impact was immediate, with traders recalibrating expectations around availability and refining activity across Asia.
USOIL price movement (Jan 2025 - Mar 2025) Source: TradingView.
Crude draws beat forecasts, but auto tariffs loom
The latest data from the U.S. Energy Information Administration (EIA) showed a sharper-than-expected decline in domestic crude inventories, with stockpiles falling by 3.34 million barrels last week. That marked the steepest drop of the year, outpacing forecasts of a 1.6 million-barrel decline. According to Commerzbank, U.S. crude reserves now stand 5% below the five-year average, while distillates are 7% lower—further validating concerns over tightness in physical markets.
However, analysts remain cautious, pointing to potential downside risks stemming from U.S. President Donald Trump's recently announced 25% tariffs on imported cars, effective April 2. Auto parts will follow with separate levies beginning May 3. Phil Flynn of Price Futures Group warned that such measures could dampen energy demand, saying, “The biggest headwind for oil right now is the concern that tariffs might slow demand.”
Adding to supply-side developments, OPEC+ is preparing to revive previously idled production starting in April, while discussions surrounding Russian oil reentry into global markets continue to weigh on longer-term pricing sentiment.
In prior coverage, we highlighted WTI’s support from stockpile draws and geopolitical disruptions. With crude prices now testing the $70 level, market direction hinges on the balance between tightening supply and evolving trade risks as April’s tariff schedule nears implementation.
