After a sharp sell-off in the oil market in April, prices have relatively stabilized, with oil trading around the psychological level of USD 60 per barrel since the beginning of last week.* While there are some major risks at play that should not be ignored, the technical outlook suggests that we may be approaching at least a short-term bullish reversal. So, what should marketers watch out for?
U.S. tariff tensions
What can be considered one of the main factors influencing investor sentiment is undoubtedly the trade policy of the United States. President Donald Trump is reportedly considering revising the 25% tariff on foreign car imports, mainly from Mexico and other major trading partners. Overall, this uncertainty has a direct impact on the global supply chain and an indirect impact on oil demand, especially as transport and production, two of the largest oil consuming sectors, are the most vulnerable to these disruptions.
Demand outlook faces downward revisions
The latest forecasts of global oil demand are also contributing to the market turmoil. The Organization of the Petroleum Exporting Countries (OPEC) has lowered its demand outlook for the first time since December, suggesting that the global economic slowdown is becoming more apparent.
Following the example of OPEC, the International Energy Agency (IEA) is also coming up with a revised outlook, which also lowered its forecast for oil demand growth for 2025 from 1.03 million barrels per day to only 730,000 barrels per day. Looking ahead to 2026, growth is expected to slow further to 690,000 barrels per day, with downward revisions due to the aforementioned worsening trade tensions and uncertainty about the global economy.
Tensions in Iran threaten supply stability
However, geopolitical risk is also hovering over the market, mainly due to increased tensions with Iran. U.S. Secretary of Energy Chris Wright recently said that the U.S. is ready to halt Iranian oil exports as part of a broader strategy to pressure Tehran over its nuclear program.
Given Iran's role as a major oil producer, any export restrictions could lead to supply shortages, which would likely drive up prices and further disrupt market dynamics, especially in the case of limited global reserves.
China's growing appetite offsets some risk
On a more positive note, China's oil imports rose nearly 5% year-on-year in March, signaling strong demand, despite global headwinds. Much of this increase comes from purchases of Iranian oil, suggesting that alternative trade routes remain active despite Western sanctions. While China's long-term demand could be mitigated by domestic economic challenges, its current level of imports provides some support to global demand.
Overproduction of Kazakhstan
Meanwhile, Kazakhstan has added another wrinkle to an already complex delivery picture. In early April, the country saw a 3% drop in oil production compared to the March average. However, Kazakhstan continues to exceed the production quotas set out in the OPEC+ agreement, which may undermine collective efforts to manage global supply and stabilize prices.
Conclusion
The current oil market reflects the complex intersection of economic, political and geopolitical factors. For traders and investors, it is crucial to consider not only the data, but also the broader context of uncertainty, which significantly reduces the predictability of price movements. With revised demand forecasts, potential supply disruptions, and rising global tensions, oil remains a high-risk commodity. However, for those who have a clear strategy and a well-timed entry into the market, this may also represent a significant business opportunity in the coming weeks.
* Past performance is no guarantee of future results.
