VINACHEM

Oil prices fell in Asian trading on Friday, heading for their weakest month since September as U.S. trade tariff concerns, and hopes of a Russia-Ukraine peace deal outweighed supply disruption concerns.

Brent Oil Futures fell 0.4% to $73.30 per barrel as of 21:38 ET (02:38 GMT), while West Texas Intermediate (WTI) crude futures dropped 0.4% lower to $69.70 per barrel.

Oil prices on track for biggest monthly decline in 6 months
Both contracts, expiring in April, were set to fall more than 3% this month, their worst monthly drop since September.

Both benchmarks are poised for their first monthly drop in three months.

On Wednesday, President Donald Trump revoked Chevron (NYSE:CVX)’s license to operate in Venezuela, effectively halting U.S. imports of Venezuelan crude, which averaged approximately 270,000 barrels per day earlier this year.

This month, Trump also reinstated the "maximum pressure" campaign against Iran aiming to reduce Iran’s oil exports to zero, by targeting brokers, tanker operators, and shipping companies involved in the sale and transport of Iranian petroleum.

Simultaneously, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) are deliberating on whether to proceed with a planned output increase in April 2025. The alliance, currently reducing output by 5.85 million barrels per day, faces internal divisions.

Despite these concerns of tightened supply, oil markets were set for monthly declines on uncertainty regarding Trump tariffs and prospects of a Russia-Ukraine peace agreement.

A peace deal between Russia and Ukraine could lead to the lifting of sanctions against Russia, thereby increasing global oil supply and exerting downward pressure on prices.

US PCE inflation in focus for Fed rate cues

Recent U.S. economic indicators have raised concerns about a potential slowdown, also contributing to the downturn in oil prices.

Data on Thursday showed a significant increase in initial unemployment claims for the week ending February 22.

In a separate release, the U.S. Bureau of Economic Analysis provided its second estimate for the fourth quarter gross domestic product (GDP).

The data confirmed that the economy expanded at an annual rate of 2.3% during this period, a deceleration from the 3.1% growth observed in the third quarter.

Investors now await the upcoming release of the personal consumption expenditures (PCE) price index, the Fed’s preferred measure of inflation.

The crucial report could provide clues on the Fed’s interest rate trajectory, at a time when it has remained hawkish due to sticky inflation.

Typically, lower U.S. interest rates weaken the dollar, making oil cheaper for foreign buyers and boosting demand, which supports higher oil prices.