Oil prices experienced daily gains on Friday but are still on track for a third consecutive weekly decline, as concerns over U.S. President Donald Trump’s renewed trade war with China and the threat of additional tariffs weighed heavily on the market.
Brent crude futures closed at $74.66 a barrel, marking a 37-cent increase, or 0.5%, but still poised to fall by more than 2% for the week. U.S. West Texas Intermediate (WTI) crude ended at $71.00 a barrel, up 39 cents, or 0.55%. Despite the slight uptick on Friday, oil prices have been under pressure due to geopolitical and economic uncertainties, primarily tied to trade-related tensions.
John Kilduff, partner at Again Capital LLC, noted that while sanctions on Iran’s crude exports were introduced earlier in the week, concerns over the U.S.-China trade war were limiting the positive impact of these measures. “We’re just trying to make our way through the sanctions/non-sanctions, tariff talk from the White House,” Kilduff said, underscoring the uncertainty in the market. WTI has been hovering close to $70 a barrel, which Kilduff sees as the lower end of the trading range.
Market participants were closely monitoring President Trump’s comments, with expectations of possible changes in U.S. policies that could swiftly alter the market’s trajectory. Trump giveth and Trump taketh away,” remarked Phil Flynn, senior analyst at Price Futures Group, capturing the volatile nature of the situation.
On Thursday, the U.S. Treasury imposed new sanctions on individuals and tankers involved in shipping Iranian crude oil to China, as part of Washington’s broader strategy to exert pressure on Tehran. Despite these sanctions, some analysts believe that the uncertainty surrounding tariffs and trade disputes might provide support for the oil market. “The imposition of tariffs and the pauses should be bullish for the oil market because it adds uncertainty,” said Michael Haigh, global head of commodities research at Societe Generale. However, he added that concerns over global economic growth and oil demand overshadowed this potential boost, as tariffs could slow GDP growth and impact oil consumption.
Trump’s decision to impose a 10% tariff on Chinese imports as part of efforts to balance the U.S. trade deficit, alongside the suspension of steeper tariffs on Mexico and Canada, added to the market’s apprehension. BMI analysts noted that the tariff-related developments have exerted downside pressure on oil prices, with fears that a trade war could weaken global oil demand.
Oil prices fell further on Thursday after Trump reiterated his intention to boost U.S. oil production, which rattled traders who were already spooked by a much larger-than-expected increase in U.S. crude inventories. The combination of supply-side concerns and global economic fears continues to weigh on oil prices, leaving the market in a precarious position heading into the weekend.
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