- Brent oil prices rebounded but faced headwinds from potential US tariffs and concerns about slowing US oil production.
- Market participants are closely watching global demand, potential US-Iran tensions, and the impact of trade wars on oil prices.
- Brent crude broke out of its previous range and above the descending trendline, but significant resistance lies ahead.
Brent crude prices rebounded from a daily low of 73.00 to trade at 73.77 but looks likely to finish the day marginally in the red. Traders looked at shrinking crude supplies and the potential impact of new U.S. tariffs on the global economy.
Yesterday Oil prices rose 1% to their highest point since February. President Trump’s announcement of tariffs on the automobile industry has ratcheted up trade war concerns.
This, coupled with some concerns over supply, is keeping oil prices supported for now. On Tuesday, President Trump imposed new 25% tariffs on potential buyers of Venezuelan crude. The move has already led to reports that India’s Reliance Industries, which runs the world’s largest refining complex, will stop importing oil from Venezuela after the tariff announcement, sources said on Wednesday.
Another factor that could be adding to supply concerns comes from the US as President Trump looked to lessen the red tape to allow Oil producers to pump more oil. However, the challenges facing US oil producers are geological in nature as the country’s top oilfields age, producing more water and gas and less oil, and could be close to reaching peak output.
Permian Basin Facing Challenges
The Permian Basin was the heart of the U.S. shale boom, helping the nation become the world’s largest oil producer and challenging OPEC’s market share. It now produces 6.5 million barrels per day, nearly half of the U.S. record of 13.5 million in December.
However, growth is slowing. Years of drilling in the core areas of the Permian’s top sub-basins, Midland and Delaware, have depleted much of the best reserves. Companies are now moving to lower-quality areas, leading to less oil, more water, and gas output. This has raised concerns in the industry, with analysts and executives warning about the challenges of sustaining production at current levels.
For now, output is still increasing.
Shale executives predict that oil production growth in the Permian will slow by about 25% this year, adding 250,000 to 300,000 barrels per day.
The government expects a bigger increase of around 350,000 barrels per day, but even that would be the smallest growth in the basin’s oil production since the COVID-19 pandemic.
Source: LSEG
These developments have no doubt given market participants food for thought and could in part explain the rise in Oil prices so far this week.Tariffs and a global economic slowdown still remain the biggest threat as does a potential US-Iran confrontation which seems to be growing more likely day by day.
US Airlines have already flagged a drop in demand and if this spreads globally then demand fears will no doubt rise once more and could put pressure on Oil prices.
Technical Analysis - Brent Crude
This is a follow-up analysis of my prior report “Brent Oil Price Update: Crude Reacts to Iran Sanctions & Potential US Tariffs” published on 20 March 2025.
From a technical analysis standpoint, Brent has finally broken free from the range it was confined to between 72.39 and 70.18 since March 20.
Brent has since broken above the range and the descending trendline which was in play.
However, today’s daily candle is set to close as a bearish inside bar candle, which could be a sign that a pullback is imminent.
Support rests at 73.00 and 72.38 before 71.33 comes into focus.
If bulls continue their charge then immediate resistance is provided by the 200-day MA at 74.45 before the 75.00 psychological level comes into focus.
Brent Crude Oil Daily Chart, March 27, 2025
Source: TradingView
Support
- 73.00
- 72.39
- 71.33
- 70.00 (psychological level)
Resistance
- 74.45
- 75.00
- 76.35
- 79.00
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