Oil Prices Under Pressure Amid Tariff Concerns and Iraqi Export Resumption

Light crude oil futures traded lower amidst trader uncertainty, facing resistance at $70.35 and $70.59. Concerns over U.S. tariffs and Iraq resuming oil exports exert downward pressure on prices. A weekly close above $70.40 might signal short-term support, but overall sentiment is bearish due to economic headwinds and increased supply prospects.

Light crude oil futures experienced a decline on Friday, remaining within the trading range established the previous day, indicative of trader uncertainty and the possibility of heightened volatility. Resistance levels have been identified at $70.35, coinciding with a Fibonacci level, and $70.59, linked to the 200-day moving average. A decisive movement beyond this range may trigger a rally towards the 50-day moving average and pivot levels of $72.02 and $72.08.

Conversely, sustained trading beneath the retracement zone and the 200-day moving average may prompt significant selling pressure, potentially driving prices down to this week’s low of $68.36. A breach of this level could signal a more pronounced decline, with $67.06 emerging as the next significant support level.

As of 11:11 GMT, Light Crude Oil Futures were priced at $69.34, reflecting a decrease of $1.01 or -1.44%. Oil prices have decreased by 1% on Friday, with both Brent and WTI benchmarks poised for their first monthly decline since November, influenced by U.S. tariff threats and Iraq’s decision to resume oil exports from the Kurdistan region.

The Iraqi oil ministry has outlined plans to export 185,000 barrels per day (bpd) through the state marketer SOMO, with expected increases in volume over time. This development raises compliance questions regarding Iraq’s obligations under OPEC+, as noted by Harry Tchilinguirian of Onyx Capital Group. Should OPEC+ postpone the return of 120,000 bpd of voluntary cuts scheduled for April, Iraq’s increased output may counterbalance these efforts, intensifying supply pressures.

Market sentiment has also been negatively influenced by U.S. President Donald Trump’s tariff announcements, which will come into effect on March 4. The introduction of a 25% tariff on goods from Mexico and Canada, along with an additional 10% duty on Chinese imports, raises concerns regarding global demand. Ole Hansen of Saxo Bank has warned of potential repercussions on global growth, inflation, and crude oil consumption.

Anticipated economic slowdowns in the U.S. and the possible increase in Russian oil supply, contingent upon the outcomes of peace talks in Ukraine, further dampen risk appetite. Additional challenges stem from unexpectedly high U.S. jobless claims and indicators of slowing economic growth in the last quarter.

Saudi Arabia, as the largest oil exporter globally, may slightly lower its official selling prices (OSP) for April shipments to Asia. Traders surveyed by Reuters expect reductions of 20 to 65 cents per barrel for Arab Light crude, establishing April prices at a premium of $3.25 to $3.70 against the Oman/Dubai average, down from March’s $3.90 premium.

These anticipated price changes reflect slight declines in benchmark prices and weakened refining margins across Asia. With China likely to increase imports of Russian and Iranian oil in March, demand for Saudi crude may face added challenges.

Amid these developments, the crude oil market seems poised for continued downward pressure. An analysis of crucial technical levels indicates that unless prices surpass the $70.59 resistance, sellers may steer futures toward $67.06. The broader macroeconomic climate, marked by escalating tariff tensions, potential rises in supply from Iraq and Russia, and diminished demand in Asia, suggests a bearish market outlook.

Traders are advised to monitor for a weekly close above $70.40, which could indicate potential short-term support; however, overall sentiment remains cautious. Moreover, insights from James Hyerczyk, a technical analyst with extensive experience in market analysis and trading, underscore the critical nature of these evolving market conditions.

In summary, light crude oil futures have faced downward pressure due to various factors, including U.S. tariffs and increasing Iraqi oil exports. A pivotal moment looms for traders as they monitor key resistance and support levels. The overall economic outlook remains bearish, influenced by tariff tensions and fluctuating demand. Attention to market movements will be essential as traders navigate this uncertain landscape.

Original Source: www.fxempire.com