Global oil prices drop as Trump halts Ukraine military aid

• Published On: 05 March 2025 at 07:16

Oil prices fell further on Tuesday, following US President Donald Trump's decision to suspend all military assistance to Ukraine and as markets braced for US tariffs on Canada, Mexico, and China to go into effect.

Brent crude futures fell 54 cents, or 0.75 percent, to settle at $71.08 per barrel.

Similarly, US West Texas Intermediate crude fell by 36 cents, or 0.53%, to $68.01.

A White House official confirmed on Monday that all US military aid to Ukraine has been suspended.

This decision came after a tense meeting between former President Donald Trump and Ukrainian President Volodymyr Zelenskiy in the Oval Office last week.

The market interprets the growing distance between the White House and Ukraine as a potential easing of tensions, reflecting broader concerns about geopolitical risks and their impact on global oil supply.

However, Goldman Sachs analysts have noted that Russia's oil production is more constrained by its OPEC+ production target of 9 million barrels per day than by current sanctions.

OPEC+'s decision to proceed with a planned oil output increase of 138,000 barrels per day—the first such move since 2022—is putting downward pressure on oil prices.

This increase in supply comes at a time when the market is already dealing with concerns about weakening global demand, contributing to the recent drop in prices.