A pumpjack operates at the Vermilion Energy site in Trigueres
A pumpjack operates at the Vermilion Energy site in Trigueres, France, June 14, 2024. REUTERS/Benoit Tessier/File Photo Purchase Licensing Rights, opens new tab
Summary
Brent, WTI on track to fall nearly 5% for the week
US tariff suspension for Mexico, Canada provides temporary reprieve
But trade war risks and OPEC+ supply increase weigh on market
NEW DELHI, March 7 (Reuters) –
Oil prices were little changed on Friday but were set for their biggest weekly decline since October as the uncertainty around U.S. tariff policy is creating concerns about demand growth at the same time major producers are set to increase output.
Brent futures rose 17 cents, or 0.24%, to $69.63 a barrel by 0315 GMT. U.S. West Texas Intermediate futures rose 12 cents, or 0.18%, to $66.48 a barrel.
However, for the week Brent is down 4.9%, set for its biggest weekly decline since the week of October 14. WTI is set to drop 4.8%, also its biggest weekly fall since that week.
Markets, including oil, have been whipsawed by fluctuating trade policy in the U.S., the world’s biggest oil consumer.
“It looks like the financial markets are in full panic mode, no longer easily pacified by Trump’s one-month postponements and exemptions on import tariffs,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
“That leaves crude stuck around four-month lows, albeit vulnerable to further slides,” she added.
ALSO READ:Oil.Settles Down To $69.30pb On US Crude Stocks Build, OPEC Hike, US Tariffs
On Thursday, U.S. President Donald Trump suspended the 25% tariffs he had imposed on most goods from Canada and Mexico until April 2, although steel and aluminium tariffs would still go into effect on March 12 as scheduled.
The amended order does not fully cover Canadian energy products, which are under a separate 10% levy.
The tariffs themselves are considered a drag on economic growth and therefore oil demand growth. But the uncertainty over the policy is also slowing business decisions, which is also impacting the economy.
“The risks to oil prices remain tilted to the downside with new supply from OPEC+ and non-OPEC producers expected to push the market well into an oversupply,” Fitch’s research unit, BMI, said in a note.
Brent prices on Wednesday fell to their lowest since December 2021 after U.S. crude inventories rose and in the wake of the decision by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to increase their output quotas.
The group said on Monday that it had decided to proceed with a planned April output increase, adding 138,000 barrels per day to the market.
Some of the downward momentum in prices has eased as the U.S. is looking at steps to halt exports from key OPEC producer Iran.
“We are going to shut down Iran’s oil sector and drone manufacturing capabilities,” U.S. Treasury Secretary Scott Bessent said in his first major speech to Wall Street executives.
