Oil retreats amid tariff worries, set for third week of gains on supply woes
Oil prices retreated on Friday amid tariff-related demand concerns, but headed for a third weekly gain on a tightening global supply outlook after the U.S. placed more pressure on Venezuelan and Iranian oil trade.
Brent crude futures lost 31 cents, or 0.4%, at $73.72 a barrel at 0742 GMT, falling for the first time after daily gains of seven consecutive sessions.
U.S. West Texas Intermediate crude futures were down 33 cents, or 0.5%, to $69.59 a barrel.
The downward corrections mirrored broader risk assets sell-offs on Friday, as the latest tariff salvo from U.S. President Donald Trump stoked investor worries of an all-out trade war.
Still, both contracts have gained about 2% so far this week. They are up around 7% since hitting multi-month lows in early March.
The main driver of the price rally has been the shifting landscape of global oil sanctions, BMI analysts wrote in a market commentary.
Trump on Monday announced new 25% tariffs on potential buyers of Venezuelan crude, days after U.S. sanctions targeting China's imports from Iran.
The order compounded the uncertainty for buyers and saw trade of Venezuelan oil to top buyer China stall. Elsewhere, sources said India's Reliance Industries, operator of the world's biggest refining complex, will halt Venezuelan oil imports.
"The potential loss of Venezuelan crude exports to the market due to secondary tariffs and the possibility of the same being imposed on Iranian barrels has caused an apparent tightness in crude supply," said June Goh, a senior oil analyst at Sparta Commodities.
Oil was also underpinned by signs of better demand in the United States, the world's top oil consumer, as the country's crude stocks 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 ended March 21, compared with analysts' expectations in a Reuters poll for a 956,000-barrel draw.
The broader global dynamics for oil trade, however, pointed to a period of heightened uncertainty, as a blitz of U.S. tariffs against trading partner countries raises fears of a sharp economic downturn in a blow to oil demand.
As a result, analysts don't expect sharp gains in oil prices to be sustained in the current environment.
"While the market is suffering under extreme uncertainties, we are holding to our forecast for Brent crude to average $76 per barrel in 2025, down from $80 per barrel in 2024," the BMI analysts wrote.
