Oil Prices Head for First Weekly Decline of 2025 Amid Trade War Threats and OPEC Pressure

Oil prices are on track for their first weekly decline of the year after U.S. President Donald Trump signalled intentions to pressure Saudi Arabia and OPEC to lower prices. West Texas Intermediate (WTI) crude fell toward $74 a barrel, marking a nearly 5% decline this week, while Brent crude closed near $78.

Trump Targets Trade and Energy Policies

In his first week as president, Trump raised the prospect of trade wars with key partners, including Canada, Mexico, and China. Alongside these tariff threats, he announced plans to urge OPEC members to reduce oil prices in the coming days. These developments have contributed to futures seeing their most significant weekly drop since November.

Winter Demand and Sanctions Keep Prices Elevated

Despite this week’s decline, oil prices remain higher for the year, primarily driven by a colder-than-average winter in the Northern Hemisphere that increased heating demand. U.S. sanctions on Russia, imposed in the final days of the Biden administration, have also disrupted global crude markets.

Trump has threatened additional penalties on Russia unless President Vladimir Putin agrees to “make a deal” to end the ongoing conflict in Ukraine.

Impact of U.S. Sanctions and Asian Refiners’ Response

The sanctions have significantly tightened the flow of Russian oil, pushing up prices for barrels from other regions, particularly the Middle East. This has prompted some Asian refiners to lower their crude processing rates or consider cuts to adapt to the elevated costs.

Crude Stockpile Trends in the U.S.

According to the Energy Information Administration (EIA), U.S. crude stockpiles declined for the ninth consecutive week, defying an earlier industry report that had predicted an increase. Current inventories are below the five-year seasonal average for this time of year, further adding to market volatility.

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