CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.00% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
The recent Oval Office clash between Donald Trump and Volodymyr Zelensky came as a surprise to most observers. Both the WTI and Brent trended lower the day following the fiery discussion. On March 3, 2025, the trading day following the Trump-Zelensky meeting, Brent crude declined 2.22%, while WTI shed 2%, closing at a per-gallon price of $71.62 and $68.26, respectively. The first-of-its-kind interaction between the premiers threatened Ukraine’s security and hurt oil traders’ sentiments. Notably, the spat only confirmed a delay in lifting sanctions against Russia, while oil has been under pressure since Trump green lit his “Drill Baby Drill” agenda.
Russia is the world’s second-largest oil producer. Peace talks could further ease energy markets, but tariffs are likely to keep inducing volatility. Oil traders must stay informed and refine their strategies to navigate the markets.
On March 11, 2025, representatives of Ukraine and the US met in Saudi Arabia to discuss a partial ceasefire. They released a joint statement, announcing that America would resume intelligence sharing and military aid with Ukraine while Kyiv would support the US proposal for a 30-day ceasefire with Russia.
Here’s what to expect from this announcement:
Restoring supply chains will increase the oil supply across Europe and the world. Shipping routes will also switch back to more efficient ones. This will potentially ease oil prices and, consequently, commodity costs worldwide.
Notably, the US has repeatedly hinted at putting greater pressure on Iran. Given the current sanctions on Russia, if fresh sanctions are imposed, oil prices may surge to $93 per barrel. Such high prices would further hurt demand while the US ramps up production. This is possibly why the US wants peace talks to culminate in strengthening its bond with Russia.
Improvements in the geopolitical environment tend to lower market uncertainty. More stable prices make for confident trading. However, the exact terms of a peace deal between Russia-Ukraine (if it happens) will play a crucial role in determining the extent of relief from global geopolitical tensions.
The European Union has supported Zelensky after the “calamitous trip” to Washington. The EU has suffered severely due to its dependency on Russia and started diversifying energy imports in 2023. Notably, it is still indirectly buying Russian produce from Turkey, which refines Russian oil and resells to the EU. The union is a massive market, which may potentially approach Middle Eastern nations, as US tariffs set it off.
Other factors pressuring oil:
Trump has confirmed that tariffs would be imposed on Canada, Mexico and China. A US-initiated trade war may slash demand while supply chains flow stronger, further weighing on oil prices. At a time when Chinese growth is not picking up the pace the world hopes it to, oil demand may remain subdued.
The Organization of the Petroleum Exporting Countries (OPEC) may no longer be able to stall output restoration. OPEC+ nations had pushed production restoration to April 2025 from December 2024. While OPEC claims to have 80% of the global oil reserves under its control, the organisation controls only 40% of the produce. With Russia and the US flooding the oil markets, OPEC’s role in controlling prices is at risk of fading.
OPEC+ is expected to gradually increase production by about 2.2 million bpd through April 2025 to mid-2026. Although the group is open to changing its stance, some member nations do not feel the same. As Q1 2025 ends, member states, including Saudi Arabia and Iraq, may no longer be able to hold production, especially while their economies are suffering due to high dependency on oil exports. A stronger supply boost may create price competition while demand is only expected to grow modestly, ultimately weighing on oil prices.
On March 10, 2025, WTI hit a six-month low, closing at $66 per barrel, having lost nearly 7% YTD. Bearish factors, such as subdued economic growth in the world’s largest consumers, accompanied by energy transition, are putting downward pressure on oil prices. As nations attempt to build energy security, fossil fuel demand may continue to suffer. Traders must also keep an eye on expected OPEC and International Energy Agency (IEA) reports to gauge short- and long-term expectations for the energy markets.
Undoubtedly, there is a greater possibility of oil prices trending downwards if peace prevails. The good news is that oil traders can take advantage of the downward volatility with derivative instruments.
Contracts for difference (CFDs) allow you to take positions in any direction. CFD oil traders speculate on the direction of price movement and not the exact price. This lowers the entry barrier to one of the most popularly traded commodity markets.
CFDs are traded on margin, which amplifies oil traders’ purchasing power. It is crucial to remember, however, that leverage amplifies potential profits but also potential losses. Therefore, risk management is paramount while trading with leverage.
A popular technique among CFD traders is to hedge larger positions in the speculated direction of the price movement with a smaller position in the opposite direction. This helps offset losses in case the market moves unfavourably. Stop loss and take profit orders are still critical to limit losses if the market switches directions due to an unexpected event.
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