Brent crude oil prices rose above $68 per barrel this week, reaching their highest levels since US President Donald Trump’s announcement of reciprocal tariffs in early April, according to Commerzbank commodity analyst Carsten Fritsch. The recovery marks a $10 rebound from the four-year low that followed the tariff escalation.
Geopolitical Developments Boost Oil Prices
Several factors have contributed to the recent rally in oil prices, including growing optimism over a potential thaw in the US-China trade dispute. Additionally, the re-imposition of US sanctions on Iran’s oil sector and its buyers has provided further upward pressure on prices. Despite these geopolitical tensions, the market has largely absorbed the substantial increase in oil supply by OPEC+ in May, at least for the time being.
OPEC+ Eyes Potential June Production Increase
However, concerns over future supply dynamics are mounting, as OPEC+ members, particularly the eight countries involved in recent production cuts, are reportedly considering a significant increase in production for June. A decision on this potential output boost is expected at the OPEC+ meeting on May 5. If implemented, this could trigger a negative price reaction in the market, with traders likely to adjust their positions ahead of the meeting.
Impact of OPEC+ Production Data
Oil market participants will also be closely watching the upcoming OPEC production survey for April, due at the end of next week. This report is expected to show a modest rise in production, as the first slight increase in output took effect this month. While the impact of these changes is unlikely to be significant unless production exceeds expectations, the market may respond to any signs of oversupply relative to the agreed limits.
As of now, the oil market remains sensitive to the dual dynamics of geopolitical developments and potential supply shifts, with future price movements hinging on the decisions made by OPEC+ in the coming weeks.
