Topic 3: CRUDE: FIRED-UP BALANCE

Crude oil prices in March 2025 exhibited a mixed trend, shaped by a combination of geopolitical developments, trade policies, and global economic indicators. The West Texas Intermediate (WTI) crude oil benchmark opened the month at approximately $70.18 per barrel. Despite experiencing fluctuations throughout the month, it ended slightly higher at $71.39 per barrel by March 31, marking a modest overall gain of around 1.72%. However, during the month, prices dipped as low as $65.75 on March 10, reflecting the ongoing volatility in the global energy markets. Multiple global factors influenced crude oil price movements. One of the primary drivers was geopolitical risk, particularly the imposition of tariffs by the United States on oil imports from select countries, including Venezuela. These trade restrictions disrupted traditional supply chains and raised concerns about global supply constraints, leading to short-term market uncertainty. Additionally, escalating trade tensions between major global economies contributed to a broader sense of economic unease, dampening investor sentiment and weakening oil demand forecasts. On the supply side, a significant development was the announcement by the Organization of the Petroleum Exporting Countries and its allies (OPEC+) regarding their future production strategy. OPEC+ confirmed plans to gradually increase oil output in small, controlled increments starting in April 2025, extending through September 2026. While the group’s cautious approach signalled a desire to support market stability, forecasts suggested that the increase in oil production—especially from non-OPEC sources—could eventually outpace the growth in global demand. If this surplus materializes, it could place downward pressure on prices in the coming quarters. Meanwhile, the global economic outlook also played a critical role in shaping oil market dynamics. Economic growth projections were revised downward for several major economies, which in turn led to lowered expectations for global oil consumption. Concerns about a potential recession intensified during the month, prompting fears of reduced industrial activity and energy usage. These factors weighed heavily on market sentiment and contributed to heightened price volatility. Despite these bearish influences, some supportive factors helped stabilize prices. A key bullish development was the reported decline in U.S. crude oil inventories. According to data released during the month, U.S. crude stockpiles dropped by approximately 4.6 million barrels. This drawdown signalled tighter domestic supply conditions and provided some upward momentum for prices, particularly during the latter part of the month. Looking ahead, crude oil prices are expected to remain volatile in April 2025. Ongoing geopolitical tensions, the evolving status of international trade agreements, and shifts in global economic conditions will likely continue to influence market direction. Additionally, further inventory data and updates on OPEC+ compliance with production targets will be closely monitored by investors and analysts. While short-term price gains are possible, underlying uncertainty surrounding demand growth and supply expansion could keep prices in a fragile balance in the near term.