Is $60 per Barrel a Bottom – or Just a Trap?

 Is $60 per Barrel a Bottom – or Just a Trap? 

 

Over the past two weeks, Brent and WTI crude prices have dropped sharply, with Brent falling below $60 per barrel for the first time since February 2021. This decline has been driven by a mix of geopolitical tensions and renewed concerns about oversupply in the market. 

A key factor is the escalating trade conflict between the U.S. and China. The Biden administration’s introduction of a 145% tariff on Chinese goods has triggered swift retaliation from Beijing, fueling fears of a global economic slowdown and weakening oil demand. 

At the same time, OPEC+ has announced it will increase output by 411,000 barrels per day starting in May. The decision surprised markets already on edge, and it has added to the downward pressure on prices. In parallel, Saudi Arabia has slashed its selling prices to Asian buyers to the lowest level in four months, which is expected to lead to a surge in exports to China. 

So—is $60 a new floor, or just a temporary pause before further declines? Technically, this level has acted as support in the past, especially close to U.S. shale breakeven levels. But given the current fragility of the fundamentals, it’s uncertain whether this floor will hold. 

All eyes are now on the upcoming OPEC+ meeting on May 5, where a shift in production policy could prove decisive. Until then, oil markets are likely to remain volatile, swayed by geopolitical headlines and macroeconomic signals. 

 

What do you think—is this a buying opportunity, or the start of a deeper downturn? 


Sources:

  1. The Times (2025, April 9). Oil price sinks below $60 for first time since pandemic 

  1. Reuters (2025, April 11). Saudi crude to China to surge in May after price fall 

  1. Enerdata (2025, April 7). OPEC+ announces oil production increase for May 2025 

  1. OPEC (2025, April 3). Press Release – OPEC+ Meeting 

 

Comments

Post a Comment

Popular posts from this blog

Crude oil: WTI and Brent

 Initaion of Ukraine Peace Talks On February 12, 2025, U.S. President Donald Trump engaged in discussions with Russian President Valdimir Putin and Ukrainian President Volodymyr Zelensky, aiming to negotitate an end to the ongoing Russia-Ukraine conflict. This move has introduced optimism into global markets, suggesting a possible resolution to a war that has significantly disrupted oil supplies and contributed to elevated prices. The prospect of peace has reduced the geopolitical risk premium, leading to a decrease in oil prices. As reported by Reuters, Brent crude futures fell by $1.82 or 2.36% selling at $75.18 per barrel, while U.S. West Texas Intermediate (WTI) crude dropped by $1.95 or 2.66% to $71.37. Efforts to Resume Iraqi oil Exports Simultaneously, Iraq is advancing plans to resume oil exports from its northern region through Turkey's Ceyhan port. Exports had been halted since March 2023 due to a legal dispute, resulting in significant financial losses. Recent budget ame...
Read more

Geopolitical Tensions and Supply Concerns

Geopolitical Tensions and Supply Concerns In our last update, we highlighted how the start of potential peace talks between the U.S., Russia, and Ukraine on February 12, 2025, caused a decline in crude oil prices due to a decrease in geopolitical risk. However, recent events indicate that this optimism might have been short-lived, as renewed tensions and economic uncertainty are causing fluctuations in Brent and WTI prices.  Despite the initial positive response to peace negotiations, tensions flared again after Ukrainian President Volodymyr Zelensky’s visit to the U.S. on February 28. Rather than strengthening support for Ukraine, his meeting with President Trump led to public disagreements, creating uncertainty about the future of the negotiations. Investors who had hoped for a quick resolution are now faced with adjusting their expectations ( Reuters).       OPEC+ and Economic Pressures At the same time, OPEC+ had planned to ease production cuts in April. How...
Read more