Oil prices rose marginally in Asian trade on Friday but were on track for a third straight week of decline, hurt by U.S. President Donald Trump’s renewed trade war on China and threats of tariff hikes on other countries.
Brent crude futures rose 32 cents to $74.61 a barrel by 0500 GMT, but were poised to fall 2.8% this week. Meanwhile, U.S. West Texas Intermediate crude was up 24 cents at $70.85 a barrel, down about 2.3% on a weekly basis.
“Oil prices saw some stability return this morning following a volatile session overnight, as traders react to news of U.S. sanctions on Iranian crude exports to China,” said Yeap Jun Rong, market strategist at IG.
The U.S. Treasury said on Thursday it is imposing new sanctions on a few individuals and tankers helping to ship millions of barrels of Iranian crude oil per year to China, in an incremental move to boost pressure on Tehran.
“Nevertheless, (today’s) oil gains are limited, reflecting persistent concerns over supply and demand headwinds, including the potential for increased production from OPEC+ and the US, as well as tariff risks weighing on global oil demand,” IG’s Yeap added.
Trump had announced a 10% tariff on Chinese imports as part of a broad plan to improve the U.S. trade balance, but suspended plans to impose steep tariffs on Mexico and Canada.
“Downside pressure has stemmed from the news flow around tariffs, with concerns over a potential trade war fuelling fears of weakening oil demand,” analysts at BMI said in a note on Friday.
“This has eclipsed US President Trump’s February 4 executive order reimposing his maximum pressure campaign on Iran, including a commitment to drive the country’s oil exports down to zero, from above 1.5 million barrels per day currently,” the BMI analysts said.
Oil prices settled lower on Thursday after Trump repeated a pledge to raise U.S. oil production, unnerving traders a day after the country reported a much bigger-than-anticipated jump in crude stockpiles.
The benchmarks were also under pressure from swelling U.S. crude inventories, which rose sharply last week as demand softened on ongoing refinery maintenance.
(Reporting by Sudarshan Varadhan and Jeslyn Lerh; Editing by Edwina Gibbs and Michael Perry)