Oil prices dropped by 3% on Wednesday after reports indicated that OPEC+ might consider speeding up its oil production increases in June. However, losses were mitigated by news suggesting that U.S. President Donald Trump could be contemplating a reduction in tariffs on Chinese imports.
By 1:42 PM EDT (1742 GMT), Brent crude futures decreased by $1.92, or 2.85%, settling at $65.52, while U.S. West Texas Intermediate crude fell $1.99, or 3.13%, to $61.68.
According to three sources familiar with discussions, several members of OPEC+ are proposing to speed up oil production hikes for a second consecutive month in June.
There have been ongoing tensions among OPEC+ members regarding adherence to their production quotas.
“It wouldn’t surprise me if OPEC is looking to increase production. This could raise issues about the unity of the cartel. They might be growing weary of limiting production,” stated Phil Flynn, an analyst with Price Futures Group.
Earlier, Brent futures reached $68.65 a barrel, marking their highest level since April 4, but both benchmarks subsequently dropped by over $2 following the OPEC+ news.
Futures recouped some losses in the early afternoon after media reports quoted Kazakhstan’s Energy Minister Erlan Akkenzhenov stating that the country is fulfilling its commitments to OPEC+ and collaborating with the group to develop “mutually beneficial solutions” regarding oil production management.
Akkenzhenov also mentioned that Kazakhstan would prioritize its national interests over those of the OPEC+ group when determining production levels.
Kazakhstan has faced criticism from other OPEC+ members for exceeding its assigned production quota.
The U.S. saw an increase in crude stockpiles, while gasoline and distillate inventories reported larger-than-expected declines in the previous week, according to the Energy Information Administration.
Crude oil inventories increased by 244,000 barrels, reaching 443.1 million barrels for the week ending April 18, the EIA reported, contrasting with analysts’ predictions for a 770,000-barrel decrease.
Possibility of Tariff Reduction
Information regarding trade tariffs helped limit some of the oil price declines. A source revealed that the Trump administration is considering lowering tariffs on goods imported from China pending upcoming discussions with Beijing, emphasizing that such actions would not be unilateral.
According to a Wall Street Journal article citing a White House official, the tariffs on China may be reduced to between 50% and 65%.
U.S. Treasury Secretary Scott Bessent expressed his belief that the significantly high tariffs between the U.S. and China will need to be lowered before trade negotiations can advance.
In another development, Trump has shifted away from the notion of dismissing Federal Reserve Chair Jerome Powell after several days of criticizing the Fed for not reducing interest rates, alleviating investor concerns regarding economic instability.
Additionally, the U.S. imposed new sanctions targeting an Iranian shipping mogul whose network is involved in handling Iranian liquefied petroleum gas and crude oil valued at hundreds of millions of dollars.