(Investing) – Oil prices rose Monday on optimism new tariff announcements from U.S. President Donald Trump will not be as severe as first feared.
At 08:55 ET (12:55 GMT), Brent Oil Futures expiring in May rose 0.4% to $71.86 per barrel, while West Texas Intermediate (WTI) crude futures gained 0.4% to $68.55 per barrel.
Both benchmarks settled higher on Friday and recorded a second consecutive weekly gain as fresh U.S. sanctions on Iran and the latest output plan from the OPEC+ producer group raised expectations of tighter supply.
President Trump is set to implement reciprocal tariffs on April 2, aiming to match the tariffs that other countries impose on U.S. goods.
However, reports over the weekend suggested that Trump is expected to take a narrower, more targeted approach to trade tariffs next month.
Rather than imposing industry-wide tariffs, Trump will reportedly focus on specific countries that account for a significant share of the U.S.’s trade imbalance.
According to the Wall Street Journal report, the administration is considering tariffs on around 15% of nations with persistent trade imbalances, referring to them as the “dirty 15.”
Likely targets include G-20 nations, along with India, Japan, China, and Vietnam.
Concerns that these tariffs would result in a global trade war, hitting economic activity, have weighed on the crude market for most of the new year.
Markets weigh fresh Trump tariff talk
Elsewhere, investors were assessing the development of U.S.-brokered Russia-Ukraine peace talks. If successful, the peace talks could lead to an increased supply of Russian oil, potentially pressuring oil prices.
A U.S. delegation will meet Russian officials on Monday to advance peace talks. Reuters reported that talks will include a potential Black Sea ceasefire and broader peace efforts in Ukraine.
The discussions follow meetings with Ukrainian diplomats on Sunday and come as President Trump intensifies efforts to halt the war.
OPEC+ production cut announcement caps losses
Oil-producing nations including Russia and other allies, called OPEC+, announced that seven member nations will implement additional oil production cuts to compensate for previous overproduction.
These reductions, ranging from 189,000 to 435,000 barrels per day (bpd), are set to continue until June 2026, according to a new schedule on OPEC’s website.
This move is expected to more than offset the group’s planned monthly production increases scheduled to commence in April.
Speculators more constructive towards oil
Speculators have become more constructive towards oil, possibly due to sanction risks hanging over the market.
Over the last reporting week, speculators increased their net long in ICE Brent by 52,853 lots to 206,138 lots. This move was predominantly driven by fresh buying, but also short covering. It was the largest weekly increase in the speculative position since October.
There was some divergence with NYMEX WTI, however, with speculators reducing their net long by 19,249 lots to 96,513 lots.
“This suggests the market is not overly concerned about the potential tariff impact on oil flows into the US. Instead, the market is more concerned about the US demand picture,” said analysts at ING, in a note.
(Ayushman Ojha contributed to this article.)
