Barron’s Senior Energy Writer Laura Sanicola and OPIS Global Head of Energy Analysis Tom Kloza discuss what’s ahead for energy this week.

Watch this week’s episode for insights into how unexpected OPEC production increases, new U.S. tariffs, and shifting global demand are impacting oil prices and refining margins.

Transcript:

LAURA SANICOLA: Hi, everyone. This is Laura Sanicola, author of Barron’s Energy Insider, and I’m here today with the head of global energy analysis at OPIS, Tom Kloza. Tom, thanks for being with me today.

TOM KLOZA: Hi. Always nice to be here.

SANICOLA: So oil futures really took a dive after President Trump announced his Liberation Day tariffs. I know the administration has explained a desire to keep energy prices lower, but why did they fall so much?

KLOZA: Well, they fell because we got the surprise in addition to the tariffs not impacting US energy imports. What we saw was an OPEC increase, which was totally unanticipated. OPEC is gonna increase production in May by another 411,000 barrels a day. And if you combine those two elements with the fact that, you know, big financial funds and the big money out there is not willing to chase futures higher, you’ve got a recipe for a real, real soft market, and we’re seeing that in April.

SANICOLA: How long will it take to understand where the demand side of the picture looks after these tariffs are in place?

KLOZA: You know, it’s interesting because we still have three factors that could mitigate against an absolute plunge. There are still efforts to suppress oil coming from Iran, coming from Venezuela, and coming from Russia, and I think they’ll probably be out there for most of the second quarter. You know, people think that in the shale business for, you know, the Permian Basin and so forth, they can probably make do with prices in the fifties, but they can’t make do with anything lower than that. And right now, we’re probably looking at a future mostly in the sixties for Brent and WTI, depending on whether or not OPEC will continue to increase crude oil each month. You know, that’s not a given at the moment.

SANICOLA: Right. I’ve they’ve been trying to regain market share they lost pre-COVID for a while now and I sense they see a window of opportunity here.

On the refining side, this has been a somewhat battered sector in recent years that actually had a pretty good start to 2025. Crack spreads really held up refining margins. How is that refining renaissance looking now?

KLOZA: Well, it was a renaissance, but I think the renaissance was measured in days as opposed to weeks.

Now it’s still a renaissance on the US West Coast where refiners are making, in some cases, more than $50 a barrel. But the rest of the country is cooling a little bit and, you know, probably overseas in Europe and far east Asia, it’s cooling as well. If the tariffs inspire the trade war that people think about, you’re looking at lower demand, particularly for diesel and marine oil and probably lower gasoline demand. So it’s a big element that we have to look at going forward.

SANICOLA: Alright. Thanks so much, Tom, and thanks everyone for watching. We’ll see you next week.