Oil Prices Climb on Weak Dollar, But Gains Limited by US Economic Slowdown and Tariff Concerns

Oil prices saw a 1% increase on Wednesday, supported by a weaker US dollar, though gains were capped amid growing concerns over a US economic slowdown and the impact of tariffs on global trade.

Oil Prices Rise Amid Dollar Weakness

At 1300 GMT, Brent crude futures climbed 75 cents (1.08%) to $70.31 per barrel, while US West Texas Intermediate (WTI) crude increased 82 cents (1.24%) to $67.07 per barrel.

A weaker US dollar, which fell to a five-month low, made crude oil more affordable for buyers using other currencies, boosting demand. Analysts at UBS and Phillip Nova noted that the Energy Information Administration (EIA) had revised its earlier projections of an oversupplied oil market, contributing to price stability.

Tariffs and US Economic Slowdown Keep Gains in Check

However, fears of a US recession and global trade tensions continue to exert downward pressure on oil prices. US President Donald Trump's tariff policies have been a central focus, with several trade measures already in effect, while others are either delayed or set to take effect soon.

Markets are increasingly worried that tariffs could escalate inflation, raise business costs, and undermine consumer confidence, leading to slower economic growth.

"Fears of a US recession, weakness in stock markets, and uncertainty surrounding trade policies are creating additional market volatility, limiting oil’s upside potential," said Hassan Fawaz, Chairman of brokerage GivTrade.

OPEC Maintains Strong Demand Forecast

Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) reaffirmed its 2025 global oil demand forecast, citing continued growth in air and road travel.

Despite concerns over tariffs, OPEC expects the global economy to adjust and stabilize. The group also reported a 363,000 barrels per day (bpd) increase in output in February, largely driven by Kazakhstan, which has struggled to comply with OPEC+ production quotas.

US Oil Production and Stockpile Trends

On the supply side, the US Energy Information Administration (EIA) revised its crude oil production estimates for 2025, predicting an average 13.61 million bpd, exceeding earlier expectations.

Additionally, US crude stockpiles rose by 4.2 million barrels for the week ending March 7, while gasoline inventories declined by 4.6 million barrels, according to data from the American Petroleum Institute (API).

Looking Ahead

Market participants now await official US government stockpile data set for release later today, which is expected to provide further trading cues. While oil prices have found support in a weaker dollar and supply adjustments, continued economic and trade uncertainties may keep gains in check over the coming months.