Oil prices on course for weekly gains; Trump tariffs loom

Investing.com-- Oil prices were little changed Friday, remaining near a one-month high and heading for a third consecutive weekly gain amid concerns of a tightening supply.

At 06:40 ET (10:40 GMT), Brent Oil Futures expiring in April weakened 0.2% to $73.19 per barrel, and West Texas Intermediate (WTI) crude futures were 0.2% lower to $69.80 per barrel. 

Both contracts were on track to rise over 2% for the week, marking their third consecutive weekly gain, driven by U.S. threats of tariffs on countries purchasing Venezuelan oil and gas, along with declining U.S. crude inventories.

"Crude prices are trading almost flat this morning as the market remains cautious about softer demand and rising supply," said analysts at ING, in a note.

Oil set for weekly jump 

U.S. President Donald Trump on Monday threatened to impose 25% tariffs on all imports from countries that purchase oil or gas from Venezuela, effective April 2. 

Venezuela’s oil exports are a significant component of its economy, with China being its largest oil buyer. Other major buyers include the U.S. and India.

The announcement has raised concerns about potential disruptions in global oil supply chains and has contributed to higher oil prices.

Moreover, the U.S. Energy Information Administration’s (EIA) weekly report released on Wednesday, suggested a tightening supply in the crude oil market.

U.S. crude oil inventories decreased by 3.3 million barrels to 433.6 million barrels, a drawdown exceeding analysts’ expectations of a 956,000-barrel reduction. 

Gasoline stocks fell by 1.4 million barrels, though the decline was slightly less than analysts’ expectations of 1.8 million barrels. 

Trump set to impose reciprocal tariffs next week

President Donald Trump announced on Wednesday his intention to impose a 25% tariff on all imported automobiles and parts, effective April 2.

Trump is also set to impose separate worldwide reciprocal tariffs on April 2, seeking to target countries with significant trade imbalances with the U.S.

The escalating trade tensions and impending tariffs are keeping oil traders cautious, as potential disruptions to global supply chains and economic uncertainty could weigh on fuel demand.

OPEC+ to start reviving output

Investors are also aware that the Organization of Petroleum Exporting Countries and allies, known as OPEC+, is scheduled to start reviving its idled production with the first monthly increases of 138,000 barrels per day next month, following its decision to gradually unwind the output cuts of 2.2 million barrels per day by 2026.

"On the other hand, some of the OPEC countries have agreed to further reduce the output (ranging from 189k b/d to 435k b/d until June 2026) to compensate for higher production earlier. The cuts, if implemented, will help offset the production hikes and balance the market in the immediate term," said ING.

(Ayushman Ojha contributed to this article.)