Oil prices fell on Monday following U.S. President Donald Trump’s call for the Organisation of the Petroleum Exporting Countries(OPEC) to reduce prices. This came after Trump’s first-week announcement of measures to boost U.S. oil and gas production. Brent crude futures dropped 53 cents, or 0.68%, to $77.97 a barrel by 0430 GMT, while U.S. West Texas Intermediate crude fell 50 cents, or 0.67%, to $74.16 a barrel.
On Friday, Trump urged OPEC to lower oil prices, aiming to weaken Russia’s finances and hasten the end of the war in Ukraine. “One way to stop it quickly is for OPEC to stop making so much money and drop the price of oil … That war will stop right away,” Trump said. He also threatened sanctions, tariffs, and taxes against Russia and other nations if no resolution is reached soon.
Russian President Vladimir Putin responded by suggesting a meeting with Trump to discuss the Ukraine war and energy prices. John Driscoll of JTD Energy noted that the situation is creating volatility in oil markets. “They are positioning for negotiations,” he said. Driscoll also remarked that Trump’s efforts to boost U.S. oil output may put the U.S. in direct competition with OPEC.
Despite Trump’s statements, OPEC and its allies, including Russia, have not publicly reacted, with OPEC+ members pointing to their plan to increase oil output starting in April. Last week, both Brent and WTI posted their first weekly decline in five weeks, reflecting eased concerns about Russian oil supply disruptions due to sanctions.
Goldman Sachs analysts do not anticipate a significant impact on Russian oil production. They noted that higher freight rates have encouraged non-sanctioned ships to transport Russian oil, while discounts on Russia’s ESPO crude grade are attracting price-sensitive buyers. “As the ultimate goal of sanctions is to reduce Russian oil revenues, we assume that Western policymakers will prioritise maximising discounts on Russian barrels over reducing Russian volumes,” they stated.
JP Morgan analysts, however, argue that some risk premium remains valid. Nearly 20% of the global Aframax fleet currently faces sanctions, and they believe the application of energy sanctions on Russia could swing either way in future negotiations. “A zero risk premium is not appropriate,” they added.
Separately, the U.S. reversed plans to impose sanctions and tariffs on Colombia after the country agreed to accept deported migrants from the U.S. The White House announced the decision late Sunday, avoiding potential disruption to oil supplies. Colombia had sent about 41% of its seaborne crude exports to the U.S. last year, according to Kpler data.
In summary, oil prices are under pressure due to Trump’s tariff-related remarks, ongoing geopolitical tensions, and evolving market dynamics, with analysts split on the potential impact of sanctions and policy changes on global oil supply and prices.
