Energy Markets Under Pressure as OPEC+ Set to Increase Supply, Tariff Uncertainty Looms

Oil prices took a hit as OPEC+ confirmed plans to gradually increase supply from April, causing ICE to settle more than 1.6% lower. The market had anticipated a possible delay in the supply increase, but OPEC+ is moving forward with its decision. Despite this development, our outlook on the market remains unchanged, as the return of supply was already expected. President Trump is likely pleased with this move, as he has been urging OPEC to boost supply.

The Bloomberg survey revealed that OPEC oil production rose by 320k b/d in February to 27.35m b/d, with Iraq leading the increase. Concerns about demand levels are also growing due to tariff uncertainty. The Atlanta Fed’s model predicts a 2.8% contraction in first-quarter GDP, a significant shift from the previous forecast of 3.9% growth. Trump’s tariff increases on China, Canada, and Mexico are adding to the uncertainty in the market.

European gas prices saw a boost, with TTF settling over 2% higher as hopes for a Russia-Ukraine peace deal fade. Storage levels in the EU are lower than last year, indicating strong support for European gas prices. The decline in iron ore prices below $100/t and the drop in cocoa prices due to supply surplus fears are also impacting the commodities market.

In conclusion, investors should closely monitor supply dynamics, tariff developments, and geopolitical tensions to make informed decisions in the volatile energy and commodities markets. Understanding these factors can help individuals protect their investments and navigate market uncertainties effectively.