Oil Plummets As Tariff Concerns - And Pessimism - Suddenly Surge

But the fears seem triggered largely by sentiment, not numbers: File Image/Pixabay

Weeks-old concerns about U.S. president Donald Trump's trade tariffs both enacted and proposed erupted full force on Tuesday, triggered by poor economic news from Germany and U.S. consumer pessimism, and causing oil prices to plummet by more than 2 percent.

As of 1534 GMT, Brent fell $1.61, or 2.2 percent, to $73.17 per barrel, while West Texas Intermediate fell $1.60, or 2.3 percent, to $69.10.

The sell offs began when a U.S. Conference Board survey released Tuesday showed that consumer confidence deteriorated at its sharpest pace in over 3 years in February, while inflation expectations surged; the Board noted that "comments on the current administration and its policies dominated the responses."

Meanwhile, data from Germany showed that country's economy shrank by 0.2 percent in the final quarter of 2024 compared with the previous quarter.

The analytical community, which in the previous session acknowledged that signs of supply tightness were becoming apparent, on Tuesday suddenly worried about supply surpluses, based on signs of rising supplies from the Organization of the Petroleum Exporting Countries (OPEC) members; the prospect of sanctions against Russia easing if a peace deal with Ukraine is reached; and BP signing a deal to redevelop four Kirkuk oil and gas fields in Iraq.

It didn't help bearish sentiment that the U.S. Energy Information Administration raised its U.S. crude oil production forecast for 2025 and 2026 in its latest short-term energy outlook, averaging 13.59 million barrels per day (bpd) this year and 13.73 million bpd next year (the previous energy outlook released in January estimated that U.S. crude output would average 13.55 million bpd in 2025 and 13.62 million bpd in 2026).

In other oil news on Tuesday, Muyu Xu, a senior crude oil analyst at Kpler, said at an event that the growing number of oil tankers sanctioned by the U.S. is limiting Iran's ability to ship its crude, due intense competition with Russia and Venezuela for vessels not yet blacklisted by Washington.

Xu pointed out, "There is only a number of tankers on the market willing to take high-risk sanctioned oil and now Iran needs to compete with Russia and Venezuela to secure them."

About 150 tankers shipped Iranian oil last year, but more than 100 of them have been sanctioned by the U.S.