Crude Oil Extends Rally Despite Tariff Tensions: March 28 Market Report

Crude oil markets are holding near one-month highs this morning, poised for a third consecutive weekly gain as supply concerns continue to outweigh demand worries stemming from escalating global trade tensions.

The market has been primarily driven by unexpected inventory draws in the U.S. and heightened geopolitical risks following the Trump administration’s recent tariff announcements.

As of early trading on March 28, 2025:

• Brent Crude: $73.95 per barrel, down 0.1% but up over 2% for the week
• WTI Crude: $69.84 per barrel, down 0.1% but similarly gaining about 2% week-over-week
• CLUSD (Crude Oil): $69.78, down 0.2% with a change of -$0.14

The oil markets are demonstrating remarkable resilience despite growing concerns about global economic headwinds, with both major benchmarks set to record their third straight week of gains.

Yesterday’s Market Movements

Oil prices edged higher on Thursday as traders continued to assess tightening global supply conditions following the U.S. tariff announcement on Venezuelan oil buyers. Brent crude futures climbed by $0.14 or 0.2%, reaching $73.93 a barrel, while U.S. WTI crude futures rose by $0.14 or 0.2% to $69.79.

The modest gains built upon Wednesday’s more substantial increase of approximately 1%, when government data revealed declining U.S. crude oil and fuel inventories. WTI crude futures settled 0.9% higher at $69.65 per barrel on Wednesday, while Brent crude rose 1.1% to $73.79.

Supply Dynamics

U.S. Inventory Data: The Energy Information Administration reported U.S. crude inventories fell by 3.34 million barrels last week to 433.6 million barrels, the largest decline since December and far exceeding analysts’ expectations for a 956,000-barrel draw.

Gasoline stocks also declined for the fourth consecutive week, indicating robust consumption patterns heading toward the summer driving season.

Global Supply Concerns: President Trump’s announcement on Monday of 25% tariffs on potential buyers of Venezuelan crude, coming days after sanctions targeting China’s imports from Iran, has created significant uncertainty in the market. These measures could remove substantial volumes from the global market:

• Venezuela exports are already seeing disruption, with India’s Reliance Industries, operator of the world’s largest refining complex, reportedly halting Venezuelan oil imports
• Iran sanctions could potentially remove up to 1.5 million barrels per day from global supply if a full “maximum pressure” campaign is implemented

Demand Factors

While supply concerns have dominated recent price movements, demand worries remain a counterbalancing force:

• The blitz of U.S. tariffs against trading partners has raised fears of a sharp economic downturn that could hurt oil demand
• Trump’s announced 25% tariff on imported automobiles could increase car prices and potentially reduce fuel demand
• However, global oil demand is still projected to rise by 1.4 million barrels per day in 2025, driven by strong air travel and automotive demand

Market Analysis

Technical Analysis: WTI crude oil has broken out of its previous range and above the descending trendline but is facing significant resistance ahead. The commodity has managed to overcome the 100-day moving average after trading below it for most of February and early March, a technically significant development.

For Brent crude, analysts suggest the primary scenario indicates a further rise towards $73.52, from where the market could move to $74.00. The intermediate support level sits at $72.77, with the next one at $71.91.

Analyst Commentary: Tony Ycam, an analyst, commented: “The news surrounding Trump’s tariffs on automobiles might ultimately prove beneficial for crude oil, as the increase in new car prices due to tariffs could slow down the shift to newer, more fuel-efficient models”.

Kar Yong Ang, financial market analyst at Octa Broker, stated: “Oil’s price movements in 2025 will be shaped by supply-side decisions from OPEC+ and the geopolitical landscape. Traders should be prepared for volatility but also recognize the potential for trading opportunities in these market conditions”.

Analysts at Standard Chartered Bank observed: “The supply surpluses the market had feared have yet to materialize, and the outlook for Q2 and Q3 does not suggest that any surplus is imminent.” They project global demand will exceed supply by 0.9 million barrels per day in Q2 and 0.5 million barrels per day in Q3.

Regional Market Updates

U.S. Market: Despite expectations of increased production, the Dallas Fed Energy Survey indicates that while oil and gas operations saw a slight uptick in the first quarter, energy executives remain skeptical about the industry’s future, citing concerns about tariffs on steel and aluminum leading to higher expenses for drilling and pipeline construction.

OPEC+ Outlook: OPEC+ has announced plans to gradually increase oil production starting in April 2025, aiming to unwind 2.2 million barrels per day of previous cuts over an 18-month period. This planned increase could put downward pressure on prices if demand growth doesn’t keep pace.

Asian Markets: China remains the largest crude oil consumer, but its slowing economy is causing apprehension about future demand. India continues to exhibit healthy demand, helping underpin market stability.

Price Forecast

The U.S. Energy Information Administration projects Brent crude oil prices to average $74 per barrel in 2025 and decline to $68 per barrel in 2026. Dan Pickering of Pickering Energy Partners expects oil prices to range between $65 and $75 per barrel in 2025 amid ongoing supply tightness and geopolitical risks.

Looking Ahead

The oil market faces an important inflection point as more Trump administration tariffs are scheduled to take effect on April 2, 2025. These include reciprocal levies and the duty on buyers of crude and gas from Venezuela.

Market participants will be closely monitoring both demand signals from major economies and any potential escalation in geopolitical tensions, particularly surrounding Iran and Venezuela, as these factors could significantly impact price direction in the coming weeks.

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