Oil prices continued their decline on Friday and were on track for their worst week in months over U.S. President Donald Trump’s new tariffs, which have raised fears over a global trade war impacting oil demand.
As of 5:41 GMT, Brent futures were down 1.13 percent to $69.35 a barrel, while U.S. West Texas Intermediate crude futures lost 1.14 percent to $66.19. Brent was on track for its biggest weekly loss since the week ended October 14, and WTI since the week ended January 21.
OPEC+ to increase oil output
In addition to Trump’s new tariffs shaking global markets, the Organization of Petroleum Exporting Countries and their allies (OPEC+) decided to move forward with their plan for oil output increases, with the organisation now aiming to return 411,000 barrels per day to the market in May, up from 135,000 bpd as initially planned.
Oil prices were already trading around 4 percent lower prior to the meeting, with investors worried that Trump’s tariffs would escalate a global trade war, impact economic growth and limit fuel demand.
In fact, both futures started falling when Trump announced the latest tariffs in a news conference on Wednesday afternoon. The order applies a 10 percent baseline tariff on all imports to the United States and higher duties on several of the country’s biggest trading partners.
Imports of oil, gas and refined products were exempted from the new tariffs, the White House said on Wednesday. However, the market’s focus is now on the global growth outlook and how it will impact oil demand and prices. Analysts noted that tariffs will be negative for trade, economic growth, and thus oil demand growth but are yet to be certain about their full impact.
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U.S. crude stock grows
On Wednesday, the U.S. Energy Information Administration (EIA) also reported that U.S. crude inventories rose by a surprisingly large 6.2 million barrels last week which was a key factor weighing on oil prices. The large increase signals weakening domestic demand, further establishing a negative outlook for oil in the short term.
Investors now seem convinced that a tariff-driven U.S. economic slowdown might force the Federal Reserve to resume its rate-cutting cycle soon. Traders now look forward to the release of the weekly jobless claims for further insight into the Fed’s rate cut path.
