Oil prices rose in Asian trading on Friday but were on track for their third consecutive week of decline as U.S. President Donald Trump’s renewed trade war with China and threats of tariff hikes on other countries take shape.
As of 5:35 GMT, Brent crude prices gained 0.51 percent to $74.67 but were set to fall 2.8 percent this week. Meanwhile, WTI futures for March delivery rose 0.44 to $70.92 a barrel, losing around 2.3 percent on a weekly basis.
Oil prices stabilized this morning following a volatile session overnight, as traders reacted to news of U.S. sanctions on Iranian crude exports to China. The U.S. Treasury said on Thursday that it is imposing new sanctions on a few individuals and tankers helping to ship Iranian crude oil to China.
Trump had announced a 10 percent tariff on Chinese imports as part of a broad plan to improve the U.S. trade balance. However, he suspended plans to impose steep tariffs on Mexico and Canada.
Potential supply increases to pressure oil prices
Oil’s gains remained limited, reflecting long-term concerns over supply and demand dynamics, particularly amidst the expected increase in production from OPEC+ and the U.S. Tariff risks also weigh on global oil demand, further impacting oil prices.
Despite the emerging tariff policies, OPEC+ continued to uphold its current oil production strategy, rejecting Trump’s calls to reduce prices. The group remains dedicated to a gradual easing in production cuts, set to commence on April 1, depending on low inventories and increasing global demand.
The OPEC+ group has been reducing output by 5.85 million barrels per day or around 5.7 percent of global supply, as part of a series of agreements initiated in 2022.
In December, OPEC+ extended its latest round of cuts through the first quarter of 2025, delaying the planned output increase until April due to weak demand and rising supply from outside the group.
China imposes tariffs on energy imports from U.S.
On Tuesday, China’s finance ministry announced a package of tariffs on several U.S. products, in an immediate response to a 10 percent tariff on Chinese imports. Some of China’s tariff announcements include duties on imports of U.S. oil, liquefied natural gas and coal. However, China’s purchases from the U.S. are relatively modest, decreasing the impact of the new measures.
Additionally, China put several companies, including Google, on notice for possible sanctions in a measured response to Trump’s tariffs.
Some tariff announcements may support a rise in oil prices, however, their impact will likely be bearish due to their impact on the global economy. These tariffs also come at a time when Trump reiterated his willingness to support additional production, limiting the impact of supply on prices.
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U.S. crude stockpiles jump
Oil prices settled lower on Thursday after Trump repeated a pledge to raise U.S. oil production, raising concerns among traders a day after the country reported a much bigger-than-anticipated jump in crude stockpiles. The benchmarks were also under pressure from rising U.S. crude inventories, which rose sharply last week as demand softened on ongoing refinery maintenance.
The U.S. Energy Information Administration’s (EIA) weekly report showed that crude oil stockpiles in the United States for the week ending January 31 climbed by 8.664 million barrels, compared to a rise of 3.463 million barrels in the previous week.
