Oil Prices Decline as U.S. Stockpiles Rise, Libya Supply Fears Ease

Oil prices fell on Wednesday, pressured by a build-up in U.S. crude inventories and reduced concerns over Libyan supply disruptions. Investors are also closely monitoring potential U.S. tariffs on Canadian and Mexican oil imports.

As of 0916 GMT:

• Brent crude futures declined $0.59 (-0.76%) to $77.90 per barrel.
• U.S. West Texas Intermediate (WTI) crude futures dropped $0.55 (-0.75%) to $73.22 per barrel.

Key Market Drivers

1. U.S. Tariff Threat on Canadian & Mexican Oil

• The White House confirmed that President Donald Trump still intends to impose 25% tariffs on Canadian and Mexican imports starting Saturday.
• Canada supplied the U.S. with 3.9 million barrels per day (bpd) in 2023, accounting for nearly 50% of total U.S. crude imports.
• Mexico contributed 733,000 bpd, according to Energy Information Administration (EIA) data.
• A tariff on these imports could disrupt North American energy markets, potentially leading to price volatility.

2. Rising U.S. Crude Inventories Weigh on Prices

• American Petroleum Institute (API) data showed a rise in U.S. crude and gasoline stockpiles, suggesting weaker demand.
• The EIA’s official inventory report, due at 1530 GMT Wednesday, will provide more insights into the supply situation.

3. Libya’s Oil Exports Running Normally

• Libya’s National Oil Corporation (NOC) announced that export activity remains unaffected following negotiations with protesters who had threatened to halt loadings at a major oil port.
• This reassurance eased concerns over supply disruptions from the OPEC-member country.

4. OPEC+ Meeting and Saudi Talks

• OPEC+ Joint Ministerial Monitoring Committee (JMMC) is scheduled to meet on Monday, adding to market uncertainty.
• Saudi Arabia’s Energy Minister and several OPEC+ counterparts have engaged in discussions following Trump’s call for lower oil prices.
• The market awaits any signals on potential production adjustments in response to global economic and political uncertainty.

Market Outlook

• Oil traders remain cautious ahead of the EIA stockpile data and OPEC+ policy signals next week.
• U.S. tariff concerns could disrupt crude flows from Canada and Mexico, potentially reshaping the supply-demand balance.
• Libyan stability has eased some immediate supply concerns, but geopolitical risks remain a key factor for price movements.