Oil prices edge up but head for third weekly decline

February 07, 2025 (MLN): Oil prices rose marginally in Asian trade on Friday but were on track for a third straight week of decline, hurt by U.S. President Donald Trump's renewed trade war with China and threats of tariff hikes on other countries.

Brent crude futures increased by $0.38, or 0.51%, to $74.67 per barrel.

West Texas Intermediate (WTI) crude futures rose by $0.30, or 0.42%, to $70.91 per barrel by [11:25 am] PST. 

"Oil prices saw some stability return this morning following a volatile session overnight, as traders react to news of U.S. sanctions on Iranian crude exports to China," said Yeap Jun Rong, market strategist at IG.

The U.S. Treasury said on Thursday it is imposing new sanctions on a few individuals and tankers helping to ship millions of barrels of Iranian crude oil per year to China, in an incremental move to boost pressure on Tehran.

"Nevertheless, today's oil gains are limited, reflecting persistent concerns over supply and demand headwinds," IG's Yeap added.

He noted that these concerns include the potential for increased production from OPEC+ and the US, as well as tariff risks affecting global oil demand, as Reuters reported.

Trump had announced a 10% tariff on Chinese imports as part of a broad plan to improve the U.S. trade balance, but suspended plans to impose steep tariffs on Mexico and Canada.

"Downside pressure has stemmed from the news flow around tariffs, with concerns over a potential trade war fuelling fears of weakening oil demand," analysts at BMI said in a note on Friday.

"This has overshadowed US President Trump's February 4 executive order reimposing his maximum pressure campaign on Iran," the BMI analysts said.

They added that the order includes a commitment to reducing Iran's oil exports to zero from the current level of over 1.5 million barrels per day.

Oil prices settled lower on Thursday after Trump repeated a pledge to raise U.S. oil production, unnerving traders a day after the country reported a much bigger-than-anticipated jump in crude stockpiles.

The benchmarks were also under pressure from swelling U.S. crude inventories, which rose sharply last week as demand softened on ongoing refinery maintenance.

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