(Bloomberg) — Oil headed for the biggest monthly loss since September as US President Donald Trump escalated tariff threats against major trading partners, hurting appetite for risk, boosting the dollar and clouding the outlook for energy demand.
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Global benchmark Brent fell toward $73 a barrel, down by more than 4% this month, while West Texas Intermediate slid below $70. Trump affirmed plans for curbs on imports from Canada and Mexico starting March 4, including a possible 10% levy on Canadian energy. He also threatened to double an existing tariff on imports from China, the top crude importer. Beijing vowed countermeasures.
The impact on crude from the potential levies is complex. The US relies heavily on oil imports from Canada and Mexico to feed its refineries, and a tariff could raise crude costs. At the same time, higher charges on all other goods pose a risk to economic growth, consumer confidence and energy consumption.
“Tariffs are back in the crosshairs,” said Chris Weston, head of research at Pepperstone Group. “A market that had reduced its sensitivity to recent tariff headlines has had to reconsider that reaction function.”
WTI is set for a run of six consecutive weekly losses. Prices have been dragged down by persistent anxiety over the fallout from US trade policy, as well poor economic data. On the supply side, pipeline exports from Iraq’s Kurdistan region may be restarted, although OPEC+ is widely seen as likely to defer a production increase once again.
Traders are also watching a strengthening in the dollar, which makes commodities priced in the currency less attractive for some overseas buyers. The Bloomberg Dollar Spot Index edged up 0.1% on Friday, after notching the year’s biggest one-day gain on Thursday.
At the same time, equities and other commodities retreated in a sign of fragile wider market sentiment.
On Ukraine, Trump said that negotiations on a deal regarding the war were “very well advanced,” although nothing conclusive has been reached. He said the US would be a major partner in developing Ukraine’s commodities extraction, including oil and gas, as well as minerals and rare earths.
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