Oil Prices Dive Amid Trade War Concerns and OPEC Pressure
Oil is set for its first weekly decline of the year after President Donald Trump hinted at potential trade wars and pledged to ask Saudi Arabia and OPEC to lower prices.
Brent crude traded near $78 per barrel, down about 3% this week, while West Texas Intermediate fell below $75. Trump's first week in office included tariff threats against Canada, Mexico, and China, followed by a request for OPEC to "bring down the cost of oil."
Despite Trump's preference to avoid tariffs on China, the dollar weakened after his Fox News interview, supporting crude prices.
Futures are on track for their largest weekly loss since November, but prices remain higher for the year, driven by increased heating demand during the Northern Hemisphere winter and U.S. sanctions on Russia.
Trump has threatened additional penalties on Moscow unless President Vladimir Putin agrees to resolve the ongoing Ukraine conflict. The U.S. sanctions under the Biden administration have restricted Russian oil flow, raising prices for Middle Eastern crude.
"Convincing OPEC to increase output will be challenging," said Warren Patterson of ING Groep NV. "Lower oil prices would also hinder significant growth in U.S. production."
Trump signed an executive order declaring a national energy emergency to bolster domestic production. He has consistently urged OPEC+ to lower prices when he deems them excessive.
U.S. crude stockpiles have declined for the ninth consecutive week, according to the Energy Information Administration. Inventories remain below the seasonal average and contradict an industry report that predicted an increase.