Oil plunged to a three-month low on rising supply prospects and fragile demand

Oil prices tumbled to a three-month low on Monday, 3 March 2025, as concerns over mounting supply and global economic uncertainty weighed on market sentiment. Market fears centred on OPEC+’s latest decision surrounding an output hike and were further compounded by the United States’ plans to intensify trade restrictions.

Brent crude fell $1.19 to settle at $71.62/barrel.

WTI dropped $1.39 to close at $68.37/barrel.

The downturn followed reports that the eight OPEC+ members responsible for the alliance’s latest supply cuts had agreed to proceed with an April production hike. According to Reuters’ estimations, this increase could amount to 138,000 barrels per day. The move has intensified concerns over market stability, particularly as demand signals remain fragile.

Demand-side challenges have been exacerbated by the US government’s intentions to finalise steep and sweeping tariffs on Canadian and Mexican imports by Tuesday (4 March 2025). Investors fear that heightened trade barriers could force the Federal Reserve to maintain a restrictive monetary policy for longer, potentially dampening economic growth and curbing energy demand.

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Written by: Derek Yong