By Giulia Petroni

Here's a look at what happened in oil markets in the week of Feb. 24-28 and what the focus will be in the days to come.

OVERVIEW: Oil prices are on track for a weekly loss amid concerns over the U.S. tariffs outlook, expectations that OPEC+ might delay its output hike plans and prospects of a potential peace deal between Ukraine and Russia. Brent crude, the international oil benchmark, trades below $73 a barrel in evening trade, while the U.S. oil gauge West Texas Intermediate is at around $69 a barrel.

MACRO: The latest U.S. data showed inflation continued to moderate in January, with the PCE price index rising 2.5% over the past year. The figure will certainly be welcomed by the Federal Reserve, which aims to bring inflation back down to its 2% target. But the U.S. central bank is still expected to keep interest rates on hold due to an uncertain fiscal and trade policy outlook.

Meanwhile, the U.S. trade deficit in goods surged to a record high in January as businesses rushed to import foreign goods ahead of President Trump's tariffs.

GEOPOLITICAL RISKS: Uncertainty around the path of U.S. tariffs continues to weigh on market sentiment, raising fears that multiple trade wars could hamper global economic growth and reduce demand for crude.

U.S. President Trump said this week that he is considering 25% tariffs on the European Union and plans to impose an additional 10% levy on imports from China. Tariffs on imports from Canada and Mexico are currently scheduled for March 4.

"Industry sources have indicated that a shift in trade flows is unlikely for logistical reasons," Commerzbank Research analysts said. "As a result, refiners can be expected to pass on at least some of the increased costs to consumers by raising the prices of petroleum products."

Traders are also keeping a close eye on geopolitical developments. Ukrainian President Volodymyr Zelensky arrived in Washington Friday to sign a minerals deal with the U.S. and reset his relationship with Trump, raising prospects that a peace agreement could soon be reached and that some Russian flows could start resuming.

At the same time, concerns over supply risks have resurfaced after the U.S. imposed a fresh round of sanctions targeting Iran's oil industry and revoked Chevron's licence to operate in Venezuela.

"Trump's decision is likely to tighten the supply of heavy sulphur oil in the U.S., especially as U.S. import tariffs on oil supplies from Canada and Mexico are looming," analysts at the bank said.

SUPPLY AND DEMAND: Potential new supply coming online is also keeping prices under pressure amid news of a possible resumption of oil flows from Iraq's semiautonomous Kurdistan region and that Kazakhstan reportedly plans to increase crude production by nearly 10% this year.

Meanwhile, data from the Energy Information Administration showed U.S. crude oil inventories fell last week, while gasoline and distillate fuel stocks increased as refineries stepped up their capacity use.

WHAT'S AHEAD: Saudi Arabia is set to release official selling prices for April and OPEC+ could announce its decision on oil output. The cartel and its allies are widely expected to once again delay plans to increase production.

"Next week is likely to be a mixed bag for the oil market: if OPEC+ once again postpones the production increase by several months, this should boost the oil price," Commerzbank analysts say. "However, disappointing Chinese oil imports towards the end of the week could lead to disillusionment."

China's demand outlook is expected to be in focus again with the opening of the National People's Congress on March 5 and the release of PMIs, market watchers said.

Write to Giulia Petroni at giulia.petroni@wsj.com

(END) Dow Jones Newswires

February 28, 2025 12:08 ET (17:08 GMT)

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