Oil prices were down nearly 2% on Friday, and on track for the worst week in months over US President Donald Trump's new tariffs, stoking concerns that a global trade war could hurt oil demand.
Brent futures fell $1.28 to $68.86 a barrel by 0703 GMT, while US West Texas Intermediate crude futures fell $1.29 to $65.66. Brent was on course for its biggest weekly loss in percentage terms since the week ended October 14, and WTI since the week ended January 21.
While the highly anticipated tariff announcement by Trump on Wednesday sank crude prices, the impact was more severe elsewhere. Investors scrambled to the safety of bonds, the Japanese yen and gold, as the news sent shockwaves through global financial markets.
The dollar index, which measures the US currency against six other units, fell to 102.98, its lowest since mid-October.
"Weakness is appearing in longer dated futures contracts. Both the six month and 12 month spreads have contracted sharply," analysts at BMI said in a note on Friday.
"The tariffs have hit hardest on key Asian emerging economies that represent a significant market for oil consumption growth."
Adding to the bearish sentiment was a decision by the Organisation of Petroleum Exporting Countries and their allies (OPEC+) to advance their plan for oil output increases, with the organisation now aiming to return 411,000 barrels per day to the market in May, up from 135,000 bpd as initially planned.
"This brings forward the expected surplus that we see in the oil market this year. More OPEC+ supply should translate to more medium sour crude oil and a wider Brent-Dubai spread," analysts at ING said on Friday. "This spread has seen an unusual discount for much of the year."
