By Callum Keown

Oil prices dropped again Tuesday as traders faced up to a double whammy of new tariffs and plans to boost production in a number of OPEC countries.

Brent crude futures, the international benchmark, fell 1.3% to $70.66 a barrel early Tuesday and are now down 3% so far in March. West Texas Intermediate futures, the U.S. benchmark, were down 1.1% to $67.59 -- also around 3% down this month. Both are more than 5% down in 2025.

President Donald Trump confirmed Monday that 25% tariffs on Canada and Mexico are "all set" to take effect Tuesday. He also signed an order increasing levies on China by another 10%.

Both supply and demand dynamics are exerting downward pressure on oil prices, Hargreaves Lansdown analyst Derren Nathan said. "10% of extra duties on Chinese goods have also come into effect and the potential fallout of an all-out trade war on energy demand is at the front of traders' minds," he added.

On the supply side, several members of OPEC -- the cartel of oil producers -- and its allies expect to start raising production next month. In total, eight countries will begin restoring output, adding about 2.2 million barrels over 18 months.

"The decision to unwind previous production cuts raises concerns about potential oversupply. With increased output, global crude prices face downward pressure, particularly if demand growth fails to match the rise in supply," Tickmill analyst Joseph Dahrieh said.

U.S. oil stocks were hit Monday, with Exxon Mobil and Chevron both down more than 3%. European oil majors were falling sharply Tuesday -- BP was down more than 4% and Shell fell 3.3% in early London trading, while French energy giant Total Energies declined 3.1%.

Write to Callum Keown at callum.keown@barrons.com

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March 04, 2025 05:18 ET (10:18 GMT)

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