LONDON :Oil prices dropped by 1 per cent on Friday and were set for their first weekly decline in three weeks as U.S. President Donald Trump recommended a 50 per cent tariff on the European Union and expectations rose that OPEC+ will increase crude output further in July.
Brent crude futures fell 64 cents, or 1 per cent, to $63.80 a barrel by 1236 GMT. U.S. West Texas Intermediate crude futures were down 64 cents, or 1.1 per cent, at $60.56.
Prices were already down for a fourth consecutive session, pressured by the OPEC+ output expectations, before the tariff news left Brent on track to fall 2.4 per cent on the week and WTI set for a 3 per cent decline.
President Trump said on Friday that he is recommending a straight 50 per cent tariff on goods from the EU starting on June 1, saying the bloc has been hard to deal with on trade.
“The tariff threats versus the European Union, an important trading partner of the U.S., supports renewed economic slowdown concerns,” said UBS analyst Giovanni Staunovo.
Meanwhile, the OPEC+ group comprising the Organization of the Petroleum Exporting Countries and allies led by Russia is holding meetings next week expected to yield another output increase of 411,000 barrels per day (bpd) for July.
Reuters reported this month that the group could unwind the rest of its 2.2 million bpd voluntary production cut by the end of October, having already raised output targets by about 1 million bpd for April, May and June.
The market is also focused on U.S.-Iranian nuclear negotiations that could determine future supply of Iranian oil. The fifth round of talks will take place in Rome on Friday.
“The growing conviction of OPEC+ sticking with the accelerated output increase throughout July, and the fact that the U.S.-Iran nuclear talks are ongoing all add to the bearish sentiment,” said PVM oil analyst Tamas Varga.
The supply tailwind offset jitters earlier in the week after a report said that Israel is making preparations to strike Iranian nuclear facilities, plus the announcement of new sanctions by the EU and Britain on Russia’s oil trade.
