OPEC Holds Production Steady Despite U.S. Pressure, WTI Faces Downward Pressure

Key Highlights

1. Oil Prices Drop Amid US Tariff Delay
   • Brent at $75.51 (-0.59%), WTI at $72.31 (-1.16%), MCX crude down 0.43%.
2. OPEC+ Keeps Production Unchanged, Ignoring Trump’s Demand
   • Voluntary supply cuts will unwind gradually starting in April.
3. Nigeria’s Crude Supply Obligation Faces Challenges
   • Dangote Refinery shifts back to crude imports, complicating local market reforms.
4. WTI Crude Faces Near-Term Downward Pressure
   • Unresolved US-China trade tensions and stable OPEC+ output weigh on prices.

Oil Prices Dip as US Backs Off Tariffs on Canada & Mexico

• At 9.56 am on Tuesday, April Brent oil futures were at $75.51, down by 0.59%, and March crude oil futures on WTI (West Texas Intermediate) were at $72.31, down by 1.16%.  
• February crude oil futures were trading at ₹6307 on Multi Commodity Exchange (MCX)during the initial hour of trading on Tuesday against the previous close of ₹6334, down by 0.43 percent, and March futures were trading at ₹6281 against the previous close of ₹6300, down by 0.30 percent.

OPEC+ Holds Steady on Production Despite Trump’s Pressure

• The US decision to delay tariffs on Canada and Mexico was followed by the Prime Minister of Canada and the President of Mexico agreeing to strengthen border enforcement following the concerns of the US President, Donald Trump, over immigration and drug smuggling. 
• Trump had imposed 25 percent tariffs on imports from Canada and Mexico, and 10 percent on imports from China on Saturday. He had imposed a 10 percent tariff on energy imports from Canada, and 25 percent on energy imports from Mexico. Trump said he would speak to China soon on the tariff. 
• In their Commodities Feed for Tuesday, Warren Patterson, Head of Commodities Strategy of ING Think, and Ewa Manthey, Commodities Strategist, said it would be wise for Canada to start investing in further pipeline capacity from its producing regions to its east and west coasts. 
• It would take several years to build this infrastructure, but it would provide Canadian producers more flexibility and the potential for more destinations for Canadian oil. “At the moment, given that the bulk of pipeline infrastructure is directed towards the US, Canada is left vulnerable to trade frictions,” they said.
• Meanwhile, Monday’s meeting of the Organization of the Petroleum Exporting Countries and its allies, commonly known as OPEC+, did not announce any change in the output policy, despite Trump’s call to the group to lower crude oil prices by increasing production output of the commodity. 
• ING Think’s Commodities Feed said the Joint Ministerial Monitoring Committee (JMMC) meeting of OPEC+ on Monday recommended no change to its output policy. This suggests that the group is likely to go ahead with the unwinding of its additional voluntary supply cuts from April. The group is scheduled to bring back around 2.2 million barrels a day of supply over 18 months starting in April. Obviously, the return of this supply will still be dependent on market conditions. The next JMMC meeting will be held on April 5.

Nigeria’s Refinery Plans Falter as Dangote Returns to Imports

• Dangote Refinery and other local refiners may continue to import crude oil, as the implementation of the Domestic Crude Supply Obligation (DCSO) law totters on complex industry crises.
 

• Although the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), yesterday, in Abuja warned that it would deny defaulting operators export permits, crude oil producers and stakeholders told The Guardian that the regulator would only bring more crisis and litigation too hot for the country to handle.  
 

• While Nigeria commenced a deal on October 1, 2024, hoping to supply about 400,000 barrels of crude oil per day to Dangote Refinery and 50,000 barrels per day to others, Dangote has returned to crude oil importation.
 

• However, energy scholar, Prof Wunmi Iledare, emphasised the need for proper pricing and legal backing in the implementation of Nigeria’s DCSO. Going by recent import data, there are indications that the refiner may import about 140 million barrels of crude oil from the United States (U.S.) and other places before the end of 2024.
• Producers, who spoke with The Guardian, noted that the domestic crude market, unless sanitised, might remain a mirage, stressing that the naira-for-crude deal, willing buyer/willing seller clause, compulsory off-take arrangement and existing future contracts, which may last for over three years, including crude-for-loan deal, would continue to frustrate prevailing attempts.
• The Commission Chief Executive of NUPRC, Gbenga Komolafe, emphasised that diverting crude oil meant for local refineries “is a violation of the law”. He stated that any change to cargoes designated for domestic refining must receive express approval from the commission.

Expert Opinion: WTI Crude Under Pressure

• OPEC and its allies opted to maintain their current production levels during Monday’s review meeting. This decision defied Trump’s call for increased output to curb rising oil prices. By holding steady, OPEC signals confidence in the market’s ability to self-balance despite geopolitical disruptions. 
• In conclusion, without a clear resolution to U.S.-China tariff tensions and no production adjustments from OPEC, WTI crude oil may continue facing downward pressure in the near term.