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SINGAPORE: Oil prices rose marginally in Asian trade on Friday but were on track for a third straight week of decline, hurt by US 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 8:00 a.m. Saudi time, but were poised to fall 2.8 percent this week. Meanwhile, US West Texas Intermediate crude was up 24 cents at $70.85 a barrel, down about 2.3 percent on a weekly basis.
“Oil prices saw some stability return this morning following a volatile session overnight, as traders react to news of US sanctions on Iranian crude exports to China,” said Yeap Jun Rong, market strategist at IG.
The US 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 percent tariff on Chinese imports as part of a broad plan to improve the US 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 fueling fears of weakening oil demand,” analysts at BMI said in a note on Friday.
“This has eclipsed US President Trump’s Feb. 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 US 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 US crude inventories, which rose sharply last week as demand softened on ongoing refinery maintenance.