"Oil Set for Weekly Loss Amid U.S. Tariffs, OPEC Output Plans"

The oil market is bracing for a tumultuous week as U.S. tariffs on imported oil and OPEC's output plans threaten to reshape global supply and demand dynamics. With benchmark prices such as WTI and Brent hovering below 80 U.S. dollars per barrel since summer 2024, the stage is set for significant shifts in the energy landscape.



The U.S. tariffs on imported oil are poised to have a profound impact on the global oil market. These tariffs could incentivize increased domestic production, as higher costs for imported oil make domestic sources more competitive. This shift could lead to a surge in upstream investing activity, with more than 60 oil and gas extraction projects reaching final investment decision (FID) in 2025. The robust upstream investing activity in non-OPEC countries, such as the United States and Guyana, is set to flood the market with more oil, exacerbating the current surplus.

However, the impact of these tariffs on oil prices is not straightforward. In the short term, tariffs could lead to an increase in oil prices due to reduced supply from imports and increased demand for domestic oil. This could temporarily buoy prices above the current benchmark. Over the long term, increased domestic production could help stabilize oil prices, mitigating the impact of tariffs on global supply and demand dynamics.

OPEC's output plans will also play a crucial role in shaping the market share of non-OPEC producers. The current surplus in oil production, driven by greater upstream activity in non-OPEC countries, is expected to continue well into 2025 and 2026. This trend could reduce OPEC's market share, as non-OPEC producers can produce oil more cost-effectively and with fewer regulatory constraints.

However, OPEC's long-term demand outlook for aviation fuels, such as kerosene and jet fuel, presents a competitive advantage. As these fuels are expected to see the greatest demand increase until 2045, OPEC's ability to control the supply of these products will give them a strategic edge in the market. This could potentially offset the loss of market share in other oil products to non-OPEC producers.

In summary, the oil market is set for a week of volatility as U.S. tariffs and OPEC's output plans reshape global supply and demand dynamics. While the short-term impact of tariffs on oil prices is uncertain, the long-term outlook suggests that increased domestic production and OPEC's control over aviation fuels will play a crucial role in determining the market's future. Investors should closely monitor these developments and adjust their strategies accordingly.