Oil prices fell by $2 a barrel on Friday due to concerns regarding a potential increase in production by OPEC and its allies, alongside a weaker-than-expected U.S. jobs report that heightened fears about demand. Brent crude futures concluded at $69.67 per barrel, reflecting a decline of $2.03, or 2.83%. U.S. West Texas Intermediate crude concluded at $67.33 per barrel, reflecting a decline of $1.93, or 2.79%.
Brent concluded the week with an increase of approximately 6%, whereas WTI experienced a rise of 6.29%. According to three individuals acquainted with the ongoing discussions among OPEC members and their allied producers, the group is poised to potentially finalize an agreement as soon as Sunday to increase production by 548,000 barrels per day in September.
A fourth source familiar with OPEC+ discussions indicated that negotiations regarding volume are still in progress, suggesting that the increase may be less significant. The U.S. Labor Department reported that the nation added 73,000 jobs in July, a figure that fell short of economists’ expectations, resulting in an increase in the national unemployment rate to 4.2% from 4.1%. “We can attribute the situation to U.S. President Donald Trump and his tariffs, or we can hold the Federal Reserve accountable for its decision not to raise interest rates,” stated Phil Flynn, senior analyst with Price Futures Group. “The Federal Reserve appears to have miscalculated their decision on Wednesday.” On Wednesday, the Federal Reserve decided to maintain the current interest rates, eliciting criticism from Trump and a group of Republican lawmakers.
Oil traders have concentrated their attention for a significant portion of the week on the prospective effects of U.S. tariffs, as the tariff rates on U.S. trading partners are largely scheduled to come into effect next Friday. On Thursday, Trump enacted an executive order that establishes tariffs between 10% and 41% on imports from numerous countries and foreign territories that did not finalize trade agreements by the August 1 deadline. This list includes Canada, India, and Taiwan.
Entities that successfully established trade agreements comprise the European Union, South Korea, Japan, and Great Britain.
“The resolution of trade deals, generally meeting market expectations with some exceptions, has been a primary factor contributing to the recent bullish sentiment in oil prices,” stated Suvro Sarkar at DBS Bank. This week, prices received support from Trump’s threats to impose 100% secondary tariffs on buyers of Russian crude, as he aims to exert pressure on Russia to cease its military actions in Ukraine. This has heightened apprehension regarding possible interruptions to oil trade flows and the withdrawal of certain oil supplies from the market.
On Thursday, analysts from JP Morgan indicated that Trump’s proposed penalties on China and India regarding their acquisitions of Russian oil could jeopardize 2.75 million barrels per day (bpd) of Russian seaborne oil exports. China and India rank as the second and third largest consumers of crude oil globally.