Oil prices are down over 1% on Friday and were headed for their first monthly drop since November, as markets braced for Washington’s tariff threats and Iraq’s decision to resume oil exports from the Kurdistan region.
Uncertainty surrounding OPEC’s production resumption plans in April and ongoing peace talks to end the war in Ukraine also weighed on investor sentiment.
The more active May Brent crude futures slipped 88 cents, or 1.20%, to $72.69 a barrel by 1212 GMT. U.S. West Texas Intermediate crude futures were at $69.36 a barrel, down 99 cents, or 1.41%.
Front-month Brent, which expires on Friday, traded at $73.09, down 95 cents.
Both benchmarks are on track to post their first monthly decline in three months.
Baghdad will announce in the coming hours the resumption of oil exports from the semi-autonomous Kurdistan region through the Iraq-Turkey pipeline, according to an Iraqi oil ministry statement.
Iraq will export 185,000 barrels per day through state oil marketer SOMO, and that quantity will gradually increase.
“The resumption of exports raises questions about how Iraq will comply with its OPEC+ obligations, having already regularly produced above its quota,” said Harry Tchilinguirian, head of research at Onyx Capital Group.
“If OPEC+ delays a 120,000 bpd return of voluntary cut barrels starting in April, then the increase in Iraq will exceed that restraint,” he added.
Oil holds at two-month low on rising supply concerns
OPEC+ is debating whether to raise oil output in April as planned or freeze it as its members struggle to read the global supply picture, eight OPEC+ sources said.
Economists at Fitch’s BMI research unit said market participants are struggling to gauge the impact of all the energy-related policy announcements made by the Trump administration this month.
U.S. President Donald Trump on Thursday said his proposed 25% tariffs on Mexican and Canadian goods will take effect on March 4, along with an extra 10% duty on Chinese imports.
Traders are reducing risks amid rising volatility sparked by Trump stepping up the tariffs war, not least against China, significantly raising concerns about global demand, said Ole Hansen, head of commodity strategy at Saxo Bank.
A tariff war could slow global growth, spark inflation, and, in turn, suppress crude demand.
Factors, including expectations of economic slowdown in the U.S., tariffs and the possibility of peace in Ukraine, which could make more Russian oil available, have curbed investors’ risk appetite.
A Reuters poll showed Brent would average $74.63 per barrel in 2025, while U.S. crude, is projected to average $70.66.
Still, oil prices climbed more than 2% on Thursday as supply concerns resurfaced after Trump revoked a licence granted to U.S. oil major Chevron to operate in Venezuela.
The cancellation could lead to the negotiation of a new agreement between the U.S. producer and state company PDVSA to export crude to destinations other than the United States, sources close to the talks said.
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