Crude Oil Weekly Outlook: OPEC+ to Unwind Cuts as Oil Faces Tariff Pressures

Key Events

OPEC+ is expected to accelerate the unwinding of supply cuts as oil trades near critical price levels
The FOMC outlook on Wednesday may spark heightened market volatility following a series of weak economic indicators
Crude oil’s $55 support is under pressure and may face renewed bearish threats this week

OPEC+ faces increasing pressure from weaker global oil demand and breaches in production compliance. In response, the group is expected to further unwind output cuts — a move aimed at penalizing non-compliant members while restoring revenue share and overall production capacity, even as oil hovers near key support levels.

While some of the excess supply may be offset by adjustments from overproducing members, the broader plan to gradually and fully unwind the 2.2 million bpd cut by year-end — if market conditions allow — underscores OPEC’s intent to reclaim market share and return closer to full capacity.

Although the news may appear to be priced in, the market reaction could intensify if oversupply concerns worsen and recession risks persist. A decisive break below the $55 support could push oil toward the next critical level at $49.

Looking at the broader picture, escalating tariff tensions in 2025 have pushed major producers to adopt more defensive strategies focused on long-term market positioning — even at the cost of short-term volatility and price pressure.

Sanctions on Iran and Venezuela may increase the probability of near-term oil price spikes, but any sustainable upside will likely require support from long-term demand recovery, trade deal resolutions, and a stabilization in global economic activity.

Broadened market volatility risks may be expected with the FOMC outlook on Wednesday given alarming economic reports with

Macro Outlook and FOMC Volatility Risk

Wednesday’s FOMC statement may inject further volatility into the energy and FX markets, especially given the latest wave of weak economic data:

Advance GDP: down to -0.3%
Unemployment claims: up to 241,000
Non-Farm Payrolls (NFP): dropped from 185K to 177K
ISM PMI: fell further into contraction at 48.7
Core PCE: dropped to 0.0% — the first time since 2020

Technical Analysis

DXY Outlook: 4H Time Frame – Log Scale

Source: Tradingview

The U.S. Dollar Index (DXY), along with U.S. equity indices, appears to be staging a rebound from April’s lows around 98.00, breaking out and retesting the neckline of an inverted head-and-shoulders pattern — despite recessionary warning signs.

If DXY holds firmly above 100.30, it may reflect renewed optimism in the U.S. economy and support for current correlated assets like oil. However, failure to hold this level could confirm a false breakout, with bearish momentum spilling over into oil prices — especially amid supply and demand imbalances.

Crude Oil Weekly Outlook: Weekly Time Frame – Log Scale

Source: Tradingview

Oil remains in a corrective phase following its recent bounce from the $55 level, now trading near $58. With OPEC+ planning to unwind supply cuts and trade tensions remaining elevated, another sharp decline — similar to 2020 — cannot be ruled out, particularly as RSI approaches weekly oversold territory last seen in 2020.

If $55 holds — a key golden Fibonacci ratio level from the 2020–2022 uptrend — prices may rebound toward $60, $64, and $66, with a further test of resistance near $70.
The sustainability of any rebound will depend on the broader economic outlook.

Downside Risk: A decisive break below $55 could trigger a deeper correction toward $49, aligning with the lower boundary of the long-term uptrend channel that dates back to the 1800s, as illustrated in the chart below.

Crude Oil Weekly Outlook: 3-Month Time Frame – Log Scale

Source: Tradingview

Written by Razan Hilal, CMT

Follow on X: @Rh_waves

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