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At 10:11 GMT, Light crude oil futures are trading $71.26, up $0.65 or +0.92%.
Tariff Concerns Keep Oil on Track for Weekly Decline
Despite Friday’s slight gains, crude oil remains on course for its third consecutive weekly loss, as global trade tensions continue to weigh on demand outlooks. Brent crude, while higher on the day, is down 2.6% for the week, while West Texas Intermediate (WTI) has lost 2.1% over the same period.
The recent downward pressure comes amid renewed tariff threats from the U.S., with President Trump imposing a 10% tariff on Chinese imports while also temporarily suspending planned levies on Mexico and Canada. Analysts suggest that while tariffs introduce uncertainty, which can sometimes be bullish for commodities, the broader concern is that prolonged trade disputes will dampen global GDP growth, thereby reducing oil demand.
Iran Sanctions Provide a Potential Supportive Factor
The U.S. Treasury announced new sanctions targeting individuals and tankers involved in Iran’s crude exports to China, an incremental effort to curb Tehran’s oil revenues. Societe Generale projects that these sanctions could halve Iran’s oil exports, potentially tightening global supply.
However, the immediate market reaction has been muted. Traders remain focused on demand risks, with concerns that tariffs and retaliatory measures will suppress consumption growth. The combination of geopolitical risks and economic uncertainty is creating a volatile trading environment, where short-term price action may be dictated by shifting macroeconomic sentiment.
Stockpile Surges Add to Bearish Pressures
Further weighing on crude prices is the unexpected surge in U.S. crude inventories, which rose sharply last week. The build, larger than anticipated, highlights softer demand as U.S. refineries undergo seasonal maintenance. Additionally, President Trump’s renewed commitment to boosting U.S. oil production has added to bearish sentiment, reinforcing concerns over supply outpacing demand in the near term.
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