Investors Wary of Tariff Impact as Oil Prices Slide

Image Credit: Reuters

Oil prices dropped on Monday due to concerns over the impact of U.S. import tariffs on global economic growth and fuel demand, alongside rising output from OPEC+ producers, which dampened investor appetite for riskier assets.

Brent crude fell by 25 cents, or 0.4%, to $70.11 a barrel by 0037 GMT, after rising 90 cents on Friday. U.S. West Texas Intermediate (WTI) crude dropped 28 cents, or 0.4%, to $66.76 a barrel, following a 68-cent gain in the previous session. WTI saw its seventh consecutive week of declines, marking the longest losing streak since November 2023, while Brent dropped for a third straight week. 

This came after U.S. President Donald Trump imposed, then delayed, tariffs on key oil suppliers Canada and Mexico, as well as raising taxes on Chinese goods. China retaliated by imposing tariffs on U.S. and Canadian agricultural products.

"Crude oil was pressured last week by U.S. tariff uncertainty, concerns about U.S. economic growth, the potential lifting of U.S. sanctions on Russia, and OPEC+ opting to increase output," said Tony Sycamore, an analyst at IG, in a client note.

"However, with much of the negative news already priced in, we expect support levels around $65/$62 to hold steady before a rebound to $72," Sycamore added, referring to WTI prices.

Oil prices recovered some of their losses on Friday after Trump announced that the U.S. would increase sanctions on Russia if it fails to reach a ceasefire with Ukraine.

The U.S. is also considering ways to ease sanctions on Russia's energy sector if the country agrees to end its war with Ukraine, according to two sources familiar with the matter. Meanwhile, OPEC+ confirmed it would proceed with oil output increases starting in April.

Russia's Deputy Prime Minister Alexander Novak stated on Friday that OPEC+ could reverse its decision if there is an imbalance in the market.

Last week, Trump expressed interest in negotiating a deal with OPEC member Iran to prevent the country from seeking nuclear weapons, though Iran has denied such intentions.

Trump has continued his "maximum pressure" campaign against Iran, which included the U.S. rescinding a waiver on Saturday that allowed Iraq to pay Iran for electricity, according to a State Department spokesperson.

Iran's Supreme Leader Ayatollah Ali Khamenei declared on Saturday that the country would not be pressured into negotiations.

 

 

 

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author