4 May 2025

Saudi Signals and Trump Tariffs Are Cracking the Oil Market

Alex Kimani

Low inventories reported today by the Energy Information Administration (EIA) did nothing to staunch the bleeding, with WTI getting gutted nearly 4% on the day, and Saudi rumors throwing another spanner in the works, while new U.S. economic data suggests more pain is in store for the sector.

Three weeks ago, eight OPEC+ countries unveiled plans to phase-out their voluntary oil output cuts by ramping up output in May by 411,000 barrels per day--equivalent to three monthly increments. The announcement came at a time when U.S. President Donald Trump announced tariffs on more than 90 countries across the globe, roiling oil markets. The eight OPEC+ countries are due to meet on 5 May to discuss production levels for June, just days after Washington released a worrying economic report. The U.S. economy shrank at an annualized 0.3% clip in the first quarter, marking the first contraction in three years, due to surging imports as companies rushed to stock up before Trump’s 90-day pause on elevated tariffs comes to an end. That’s a sharp turnaround in fortunes compared to the final quarter of 2024 when the economy expanded by 2.4%.

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