Crude oil prices saw a slight uptick as signs of shrinking Russian supply eased oversupply fears. However, the market remained near its lowest levels of the year, with President Donald Trump’s tariff policies continuing to weigh on investor sentiment.
West Texas Intermediate (WTI) hovered around $72 per barrel on Monday after enduring its longest losing streak since September. The modest price recovery was fueled by reports that Russia’s oil production in January fell below its OPEC+ quota, raising concerns about a tightening market.
Additionally, news that European policymakers are considering seizing Russia’s “shadow fleet” of tankers further supported futures.
At the same time, natural gas prices in Europe surged to a two-year high, increasing incentives for power producers to switch to oil as an alternative fuel source—another factor providing some support to crude prices. Despite these supply-side developments, oil prices have still dropped 10% from their January highs.
The U.S. president’s threats to impose new tariffs on imports from Canada, Mexico, and China have spooked investors and led to the longest price decline in months. Hedge funds, sensing market uncertainty, have been offloading bullish WTI positions for the past two weeks while increasing short positions to their highest levels in two months.
Over the weekend, Trump escalated trade tensions further by announcing new tariffs on aluminum and steel, which would apply to all countries.
These duties could have significant ripple effects on the U.S. energy industry, particularly for oil drillers, who rely on specialty steel that is not produced domestically. However, Trump has yet to clarify when these tariffs will take effect.
Adding to the uncertainty, China is set to introduce retaliatory tariffs on U.S. goods starting Monday, responding to Trump’s latest trade measures, which came into force last week.