Oil prices fell on Monday after President Trump announced sweeping measures to boost U.S. oil and gas production in his first week in office and called on OPEC to lower prices.
OPEC+ has yet to respond to Trump’s call to lower prices.
Brent crude futures fell 35 cents, or 0.45%, to $78.15 a barrel by 0726 GMT after rising 21 cents on Friday. WTI fell 40 cents, or 0.54%, to $74.26 a barrel.
Oil pared earlier losses after the White House late Sunday quickly dropped plans to impose sanctions on Colombia and tariffs on the country after it accepted migrants deported from the United States.
The sanctions have disrupted oil supplies, with Colombia sending about 41% of its crude exports by sea to the United States last year.
Still, Trump’s repeated call on Friday for the Organization of the Petroleum Exporting Countries to lower oil prices to hurt oil-rich Russia’s finances and help end the war in Ukraine continued to weigh on oil markets.
Trump said that if OPEC were to give up its ambition to make so much money, and lower oil prices, things would get easier in the war in Ukraine.
Trump also threatened to hit Russia “and other participating countries” with taxes, tariffs, and sanctions if no deal is reached to end the war in Ukraine.
Putin and Trump are positioning themselves for talks. Putin said he and Trump should meet to discuss the Ukraine war and energy prices.
Oil markets are slightly lower because of Trump’s policies to increase U.S. production and secure overseas markets for U.S. crude.
OPEC, meanwhile, is in a competition for some of the market share.
But OPEC and OPEC+ have yet to respond to Trump’s call, and OPEC+ delegates have indicated that a plan is already in place to increase oil production from April.
Both indexes fell for the first time in five weeks last week as concerns that sanctions on Russia would disrupt supply eased.
Russian production is not expected to take a major hit. Higher freight rates are encouraging more supply of non-sanctioned vessels to carry Russian oil, while a deepening discount on the affected Russian ESPO class is attracting price-sensitive buyers to volunteer and continue buying the oil.
While the ultimate goal of sanctions is to reduce Russian oil revenues, they serve to maximize discounts on Russian barrels rather than reduce Russian volumes.
Given that about 20% of the global Aframax fleet is currently under sanctions, some risk premium could be taken.
Applying sanctions to the Russian energy sector as leverage in future negotiations could go either way, suggesting that a zero-risk premium is inappropriate.
