Oil posts weekly loss as US-China trade war sparks demand concerns
Oil posted a third consecutive week of declines as concerns over a trade war between the United States and China weighed on markets.
West Texas Intermediate crude (CL=F) and Brent futures (BZ=F) ended the week down more than 2% after the US tariffs on select Chinese imports went into effect on Tuesday and China retaliated.
“Crude oil futures edged higher, but the trend remains mostly bearish,” said Dubai-based economist Hamza Zraimek in a recent note. “Ongoing trade tensions between the US and China have raised fears of a global economic slowdown, potentially weakening oil demand.”
A planned call for Tuesday between President Trump and Chinese leader Xi Jinping was cancelled, diminishing optimism over a quick agreement.
On Monday, Trump struck a deal with Canada and Mexico to delay 25% tariffs by at least a month.
Meanwhile, a report from Reuters said President Trump told Republican lawmakers he plans to announce reciprocal tariffs on American imports as early as Friday, further risking downward pressure on oil over concerns of slowing economic growth and lower demand.
An aerial view of a crude oil storage facility is seen on May 5, 2020 in Cushing, Oklahoma. The West Texas Intermediate oil stored in the small town in the midwestern United States is used as a reference price for crude bought and sold by refiners in Asia, hedge funds in London and traders in New York. (Photo by Johannes EISELE / AFP) (Photo by JOHANNES EISELE/AFP via Getty Images) · JOHANNES EISELE via Getty Images
The threat of tariffs has outweighed the risk of supply restrictions.
On Friday, oil futures rose in reaction to the announcement of the first US sanctions against oil producer Iran under the current Trump administration. WTI gained less than 1% to settle just below $71 per barrel, while Brent futures closed above $74 per barrel.
The sanctions target some individuals, firms, and three tankers helping ship oil to China.
WTI has erased its year to date gains, while Brent is less than 1% higher since the start of January.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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