Market News

(Bloomberg) -- Oil extended losses from the lowest in almost three months as the Trump administration’s tariffs on US trading partners including China took effect, while OPEC+ signaled plans to revive halted production.

Brent dropped below $71 a barrel after losing 1.6% on Monday, and West Texas Intermediate was near $68. Beijing immediately retaliated by imposing levies on US agriculture, raising concerns over a bruising trade war. Tariffs on Canada and Mexico also came into effect on Tuesday.

Benchmark futures tumbled in the previous session after OPEC+ said it will start increasing output in April following repeated delays, though the boost could be paused or reversed subject to market conditions.

Global oil markets face a supply surplus this year even if OPEC+ keeps output flat, the International Energy Agency said in a report last month. The cartel, led by Saudi Arabia and Russia, plans to increase production by 138,000 barrels a day, according to a statement posted on its website.

Crude has trended lower since mid-January on concerns about lackluster demand and the fallout from President Donald Trump’s trade policies. Levies on Chinese exports were doubled to 20%, while most of what the US imports from Canada and Mexico is subject to a 25% duty.

Canadian energy such as crude is subject to a 10% tariff.

“Oil is under pressure on two fronts,” said Warren Patterson, Singapore-based head of commodities strategy for ING Groep NV, citing the supply boost from OPEC+ and US levies. Retaliatory tariffs mean “likely further escalation, which will only further cloud the growth and demand outlook.”