[WORLD] Oil prices fell 2% on Wednesday as sources claimed Opec+ will consider increasing oil supply in June, although losses were limited by a report that US President Donald Trump may lower tariffs on Chinese imports. Brent crude futures fell US$1.32, or 1.96%, to US$66.12 a barrel, while US West Texas Intermediate crude closed US$1.40, or 2.2%, lower at US$62.27.
Global oil benchmark Brent surged to a session peak of US$68.65 on Wednesday—its highest level since April 4—amid growing anticipation around potential supply adjustments by Opec+.
According to three sources familiar with ongoing discussions, several Opec+ members are expected to propose a faster pace of output increases for the second consecutive month in June. The move comes as global fuel consumption continues to rebound, particularly in Asia, where refineries are ramping up purchases ahead of the seasonal uptick in travel demand.
Despite the signs of recovery, questions remain over whether the group's incremental supply hikes can keep pace with economic reopenings—especially as the spread of COVID-19 variants poses fresh threats in key regions such as Europe and India.
Tensions within the alliance have also resurfaced, particularly over uneven compliance with production quotas.
“It wouldn’t surprise me if Opec wants to raise production,” said Phil Flynn, an analyst with Price Futures Group. “But it could raise concerns about the group’s cohesion. Maybe they’re just tired of holding back.”
Oil prices trimmed some losses later in the session after Kazakhstan’s Energy Ministry issued a statement reaffirming its commitment to market stability. While not a formal Opec member, Kazakhstan is an Opec+ ally and has drawn criticism from other members for exceeding its production limits.
The ministry emphasized Kazakhstan’s role as a responsible partner in the global energy community, expressing a desire for predictable supply and demand dynamics. Energy Minister Erlan Akkenzhenov stressed that participation in Opec+ remains vital for global market stability and national economic planning, though he acknowledged that national interests will guide production decisions.
Similar quota breaches by countries like Russia and Iraq have fueled ongoing debate within the group about enforcement and the risk of market oversupply.
Meanwhile, additional support for oil prices came from U.S. inventory data showing a surprise increase in crude stocks, even as gasoline and distillate inventories dropped more sharply than expected. Analysts interpreted the product drawdowns as evidence of resilient consumer demand, though rising crude imports point to a still-fragile market recovery.
“We’re seeing another bullish decline in refined product inventories during what is typically build season,” said Josh Young, CIO at Bison Interests. “It doesn’t yet reflect any fallout from trade concerns either.”
In a separate development, news that the Trump administration may ease tariffs on Chinese imports helped limit further losses in oil markets. A source close to the matter said any reduction would come following talks with Beijing and would not be imposed unilaterally.
According to the Wall Street Journal, tariffs could be scaled back to between 50% and 65%, potentially easing global trade tensions and bolstering economic sentiment—both of which are positive signals for oil demand. However, market participants remain cautious, noting past negotiations have frequently faltered.
U.S. Treasury Secretary Scott Bessent echoed the sentiment, stating that meaningful progress in U.S.–China trade relations hinges on lowering current tariff levels.
In other geopolitical developments, the U.S. introduced new sanctions targeting an Iranian shipping magnate with links to large-scale crude and liquefied petroleum gas exports. The move highlights persistent geopolitical risks facing the oil market, as Iran attempts to boost exports amid stalled nuclear negotiations.
Such tensions could further disrupt global supply chains, potentially counteracting the bearish impact of Opec+’s anticipated production increases.
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