May WTI crude oil (CLK25) today is down -0.07 (-0.12%), and May RBOB gasoline (RBK25) is up +0.0041 (+0.20%).
Crude oil and gasoline prices today are mixed. Hopes that the US will accomplish trade deals have sent stock prices soaring today and boosted risk-on sentiment for asset markets. Gains in crude are limited on concern the global trade war could escalate and derail economic growth and energy demand after President Trump said the US would impose retaliatory tariffs on China if it refuses to rescind tariffs it imposed on US goods.
Tariff turmoil continues to weigh on energy prices on concern that escalation of the global trade war could derail the global economy and energy demand. President Trump said he would add 50% tariffs on all Chinese goods if it refuses to remove its 34% tariff on US goods by Wednesday. China’s Ministry of Commerce replied, “The US threat to escalate tariffs on China is a mistake on top of a mistake, and if the US insists on its own way, China will fight to the end.”
Crude prices are also under pressure after Saudi Arabia said on Sunday that it would cut its flagship oil prices by $2.30 a barrel for customers for May delivery, the largest cut in over two years.
Crude prices have a negative carryover from last Thursday when OPEC+ said it would boost crude production in May by 411,000 bpd, much more than the +138,000 bpd of crude production it added this month. OPEC+ is boosting output to reverse the 2-year-long production cut, gradually restoring a total of 2.2 million bpd of production. OPEC+ had previously planned to restore production between January and late 2025, but now that production cut won’t be fully restored until September 2026. OPEC Mar crude production rose +80,000 bpd to a 13-month high of 27.43 million bpd.
An increase in crude oil held worldwide on tankers is bearish for oil prices. Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least seven days rose by +4.3% w/w to 58.56 million bbl in the week ended April 4.
Crude oil found support when the US Treasury Department’s Office of Foreign Assets Control on March 20 sanctioned a China-based oil refinery and 19 entities and vessels tied to shipping Iranian crude oil. The US is applying pressure to Iranian crude exports after President Trump recently sent a letter to Iran’s Supreme Leader Ali Khamenei that said Iran has a two-month deadline to reach a new nuclear deal. According to Rystad Energy A/S, a maximum-pressure campaign could remove as much as 1.5 million bpd of Iranian crude exports from global markets, a bullish factor for crude.
Crude prices are being supported by tensions in the Middle East, which could lead to disruption of crude supplies from the region. Israel continues to launch airstrikes across Gaza, ending a nearly two-month ceasefire with Hamas, and Israeli Prime Minister Netanyahu vowed to act “with increasing military strength” to free hostages and disarm Hamas. In addition, the US has launched strikes on Yemen’s Houthi rebels, and Defense Secretary Hegseth said strikes would be “unrelenting” until the group stops attacking vessels in the Red Sea.
In a supportive factor for crude oil prices, the US on January 10 imposed new sanctions on Russia’s oil industry that could curb global oil supplies. The measures targeted Gazprom Neft and Surgutneftgas, which exported about 970,000 bpd of Russian crude in the first 10 months of 2024, accounting for about 30% of its tanker flow, according to Bloomberg data. The US also targeted insurers and traders linked to hundreds of tanker cargoes. Russian oil product exports in March rose to a 5-month high of 3.45 million bpd, according to data compiled by Bloomberg from analytics firm Vortexa. Weekly vessel-tracking data from Bloomberg showed Russian crude exports rose by +40,000 bpd w/w to 3.07 million bpd in the week to March 30.
Last Wednesday’s EIA report showed that (1) US crude oil inventories as of March 28 were -4.6% below the seasonal 5-year average, (2) gasoline inventories were +2.0% above the seasonal 5-year average, and (3) distillate inventories were -6.0% below the 5-year seasonal average. US crude oil production in the week ending March 28 was unchanged w/w at 13.58 million bpd, modestly below the record high of 13.631 million bpd from the week of December 6.
Baker Hughes reported last Friday that active US oil rigs in the week ending April 4 rose +5 rigs to a 10-month high of 489 rigs, moderately above the 3-year low of 472 rigs posted on January 24. The number of US oil rigs has fallen over the past two years from the 4-1/2 year high of 627 rigs posted in December 2022.
