By Stephanie Kelly
NEW YORK (Reuters) -Oil prices fell to multi-month lows on Tuesday after reports of OPEC+ plans to proceed with output increases in April while further price pressure was applied by U.S. tariffs on Canada, Mexico and China as well as Beijing’s retaliatory tariffs.
Brent futures settled 58 cents lower, or 0.8%, at $71.04 a barrel. The session low was $69.75 a barrel, its lowest since September.
U.S. West Texas Intermediate (WTI) crude fell 11 cents a barrel, or 0.2%, at $68.26. The benchmark previously dropped to $66.77 a barrel, the lowest since November.
OPEC+, the Organization of the Petroleum Exporting Countries and allies including Russia, decided on Monday to proceed with a planned April oil output increase of 138,000 barrels per day, its first since 2022.
The move took the market by surprise, said Bjarne Schieldrop, chief commodities analyst at SEB.
“The change in OPEC strategy looks like they are prioritising politics over price. Those politics are likely connected with the wheeling and dealing of Donald Trump,” Schieldrop said, referring to the U.S. president’s calls for lower oil prices.
U.S. tariffs of 25% on imports from Canada and Mexico took effect at 12:01 a.m. EST (0501 GMT) on Tuesday, with 10% tariffs on Canadian energy, while tariffs on imports of Chinese goods were increased to 20% from 10%.
Analysts expect the tariffs to curb economic activity and demand for energy, weighing on oil prices.
As the U.S. tariffs kicked in on Tuesday, China swiftly retaliated, announcing 10-15% increases on import levies covering a range of American agricultural and food products while also placing 25 U.S. companies under export and investment restrictions.
Prices steadied later in the session as some of the initial worries about the tariffs eased.
Further, some geopolitical tension moderated after Ukrainian President Volodymyr Zelenskiy said on Tuesday he regretted last week’s extraordinary Oval Office clash with Donald Trump, adding that Kyiv was ready to come to the negotiating table as soon as possible.
The statement comes after Trump decided to pause all U.S. military aid to Ukraine. The move followed a Reuters report that the White House has asked the State and Treasury departments to draft a list of sanctions that could be eased for U.S. officials to discuss during talks with Moscow.
Lifting sanctions could bring more Russian oil to market. But on Monday, Goldman Sachs analysts said Russia’s oil flows were constrained more by its OPEC+ production target than sanctions.
The bank also said higher-than-expected crude supply and a demand squeeze from softer U.S. economic activity and tariff escalation posed downside risks to oil price forecasts.
Chinese demand is also down, with a period of refinery maintenance looming, said Josh Callaghan, head of crude derivatives at Arrow Energy Markets.
The Trump administration said on Tuesday it was ending a license that the U.S. has granted to U.S. oil producer Chevron since 2022 to operate in Venezuela and export its oil, after Washington accused President Nicolas Maduro of not making progress on electoral reforms and migrant returns.
(Reporting by Stephanie Kelly in New York, Anna Hirtenstein in London, Colleen Howe in Beijing and Emily Chow in Singapore; Editing by Emelia Sithole-Matarise, David Goodman, David Gregorio and Deepa Babington)
