(Bloomberg) — Oil fell after a Reuters report that some OPEC+ members will seek an accelerated output increase overshadowed an optimistic turn in trade talks between the US and China.
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West Texas Intermediate futures sank as much as 3.4% to trade below $62 a barrel. The report compounded pressure from an earlier item from the news service that Kazakhstan’s newly appointed energy minister said the country is unable to reduce production at its three largest projects because they are controlled by international oil majors.
Kazakhstan said in a statement Wednesday that it is committed to constructive work with OPEC+.
The commodity pared some losses on a Wall Street Journal report that US tariffs on China could be cut by more than half in some cases. Treasury Secretary Scott Bessent later told reporters that President Donald Trump hasn’t offered to take down US tariffs on China on a unilateral basis and that a full trade deal with China may take two to three years.
Trump’s earlier comments that he doesn’t plan to fire Federal Reserve Chair Jerome Powell spurred a relief rally in stocks and provided a floor to crude prices.
Oil has declined sharply this month, touching a four-year low at one point, driven by investors’ fears that the onslaught of tariffs and counter-levies between the US and its biggest trading partners will sap crude demand. The drop has been compounded by the OPEC+ alliance’s decision to bring back production at a faster-than-expected pace, reviving concerns about a supply glut.
That move was designed to keep perennial overproducers like Kazakhstan in line with their targets, and Saudi Arabia’s energy minister said at the time the hike would be just an “aperitif” if those countries didn’t improve their performance.
The energy minister’s comments raise concerns about whether OPEC+ will continue to press ahead with a faster-than-expected pace of output hikes in the coming months. That could add supplies to a market that has been relatively strong in the short-term, but that analysts widely expect to be oversupplied later this year.
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