Oil steady; market eyes OPEC+ output increase, US tariffs

File photo: A crude oil tanker sails in Nakhodka Bay near the port city of Nakhodka, Russia, December 4, 2022. Reuters/Tatiana Meel/File Photo

Brent futures inched 6 cents up, or 0.1%, to $71.10 a barrel at 7.30 GMT US West Texas Intermediate (WTI) crude dipped 24c, or 0.4%, to $68.02 a barrel.

In the previous session, the contracts settled at close to multi-month lows, weighed by concerns that the U.S. tariffs and counter-tariffs by the affected countries will slow economic growth and reduce fuel demand.

"Unfavourable supply-demand dynamics have created a double whammy, with tariff uncertainties posing downside risks to global growth, and in turn, oil demand," said Yeap Jun Rong, market strategist at IG.

"OPEC+ remains on track to increase production in April, while optimism over a potential resolution to the Ukraine-Russia conflict raises the prospects of Russian supplies returning to the market," Yeap added.

The Organization of the Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+, decided on Monday to increase output for the first time since 2022.

The group will make a small increase of 138,000 barrels per day from April, the first step in planned monthly increases to unwind its nearly 6 million bpd of cuts, equal to nearly 6% of global demand.

A 25% tariff on all imports from Mexico, a 10% tariff on Canadian energy and a doubling of duties on Chinese goods to 20% came into effect on Tuesday. The Trump administration also imposed 25% tariffs on all other Canadian imports.

U.S. President Donald Trump's self-declared trade war is seen by economists as a recipe for fewer jobs, slower growth, and higher prices, which could kill demand. The lower economic growth will likely impact fuel consumption in the world's biggest oil consumer.

The Trump administration also said on Tuesday it was ending a license that the U.S. has granted to U.S. oil producer Chevron since 2022 to operate in Venezuela and export its oil.

The move puts 200,000 bpd of supply at risk, said ING commodities strategists in a note on Wednesday.

"This will leave US refiners looking for alternative heavy grades of crude oil just as other suppliers - Canada and Mexico - face tariffs," they added.

Meanwhile, US crude stocks fell by 1.46 million barrels in the week ended 28 February, market sources said, citing American Petroleum Institute figures on Tuesday. Investors now await government data on US stockpiles, due on Wednesday.