Oil prices rose on Friday and were set to break their third successive weekly decline amid rising fuel demand and expectations that U.S. President Donald Trump’s plans for reciprocal global tariffs would not come into effect until April.
As of 5:02 GMT, Brent crude prices gained 0.19 percent to $75.16, while WTI crude prices rose 0.13 percent to $71.38. This week, Brent was up 0.7 percent and WTI rose 0.5 percent.
Cooling trade war fears support crude
On Thursday, Trump ordered his administration to consider imposing reciprocal tariffs on numerous trading partners. However, commerce and economics officials need to study reciprocal tariffs against countries that place tariffs on U.S. goods, postponing the decisions to April 1.
Following the announcement, markets were hopeful that this would give more time to avoid a trade war which, in turn, supported oil prices.
Trump had threatened additional tariffs against U.S. trade partners which impacted oil prices in the previous session due to concerns that tariffs may reduce economic growth and, therefore, oil demand. He said he would impose reciprocal tariffs as soon as Wednesday evening on every country that charges duties on U.S. imports, further raising fears of a widening global trade war which will likely raise U.S. inflation.
The president had previously announced tariffs targeting Canada, Mexico and China but suspended those for the neighboring countries the following day. Such tariffs could potentially hinder global economic growth as well as energy demand.
Easing Russia sanctions to increase supply
Despite hopes of avoiding a trade war, a potential peace deal between Russia and Ukraine kept traders concerned that an end of sanctions on Moscow could boost global energy supplies. This week, Trump ordered U.S. officials to begin talks on ending the war in Ukraine, after Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy expressed a desire for peace in separate phone calls with him.
Brent and WTI fell more than 2 percent on Wednesday after Trump said the two presidents expressed a desire for peace in separate phone calls with him.
Russia is the world’s third-largest oil producer and sanctions imposed on its crude exports as a result of its invasion of Ukraine nearly three years ago have supported higher prices. The sanctions by the U.S. and EU were pushing Russia’s oil output lower which supported the upside in oil prices. Therefore, with potential sanctions on Russia easing, the country’s oil supply is expected to rise again.
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U.S. oil inventories rise
An increase in crude oil inventories in the U.S., the world’s biggest crude consumer, weighed on the market this week. U.S. crude stocks rose more than expected last week, according to the latest data from the Energy Information Administration (EIA).
Crude inventories rose by 4.1 million barrels to 427.9 million barrels in the week ended February 7, the EIA said, compared to a rise of 8.664 million barrels in the previous week. The market consensus estimated that stocks would increase by 2.8 million barrels.
The EIA has revised its estimate for U.S. crude production upwards, now projecting an average output of 13.59 million barrels per day in 2025, a slight increase from the previous estimate of 13.55 million barrels per day, while maintaining its demand forecast.
