Oil prices plunge on tariff concerns
Oil prices fell on Friday on tariff-related demand concerns, but were headed for a third weekly gain on a tightening global supply outlook after the U.S. put more pressure on Venezuela and Iran’s oil trade.
Brent crude was down 31 cents, or 0.4%, at $73.72 a barrel by 0742 GMT, dropping for the first time in seven straight sessions of daily gains.
U.S. West Texas Intermediate crude was down 33 cents, or 0.5%, at $69.59 a barrel.
The declines mirrored a broader selloff in risk assets on Friday, as the latest tariff attack from U.S. President Donald Trump stoked investor fears of an all-out trade war.
However, both contracts have risen about 2% so far this week. They are up about 7% since hitting multi-month lows in early March.
The main driver of the price increase was the changing global oil sanctions landscape, BMI analysts wrote in a market commentary.
Trump on Monday announced new tariffs of 25% on potential buyers of Venezuelan crude, days after U.S. sanctions targeted Chinese imports from Iran.
The order deepened uncertainty for buyers and halted trade of Venezuelan oil to major buyer China. Elsewhere, sources said India’s Reliance Industries (NSE:RELI), operator of the world’s largest refining complex, would halt imports of Venezuelan oil.
“The potential loss of Venezuelan crude exports to the market due to secondary tariffs and the possibility of similar tariffs being imposed on Iranian barrels has led to tighter crude supplies,” said June Goh, senior oil analyst at Sparta Commodities.
Oil was also supported by signs of better demand in the United States, the world’s largest oil consumer, as the country’s crude inventories fell more than anticipated.
Data from the Energy Information Administration showed U.S. crude inventories fell by 3.3 million barrels to 433.6 million barrels in the week to March 21, compared with analysts’ expectations in a Reuters poll for a 956,000-barrel draw.
However, broader global dynamics for oil trade point to a period of heightened uncertainty, as U.S. tariffs on trading partners raise concerns of a sharp economic downturn that would impact oil demand.
As a result, analysts do not expect the sharp rise in oil prices to be sustained in the current environment.
“Despite the extreme uncertainty in the market, we maintain our forecast for Brent crude to average $76 per barrel in 2025, down from $80 per barrel in 2024,” BMI analysts wrote.
Source: Investing.com
