Oil Incurs Sharp Weekly Loss On Trump-Driven Volatility

However, data suggests Canada's oil industry isn't buying his tariff threats: File Image/Pixabay

Oil prices achieved a modest gain on Friday, but not nearly enough to prevent two benchmarks from falling over 3 percent for the week, as U.S. president Donald Trump kindled trading tension by threatening sanctions against Russia if it doesn't reach a cease-fire with Ukraine.

Brent settled up 90 cents at $70.36 per barrel, while West Texas Intermediate settled up 68 cents at $67.04.

For the week, Brent was down 3.8 percent; WTI was down 3.9 percent.

In addition to the sanctions sabre rattling, Russia's deputy prime minister Alexander Novak told media that the Organization of the Petroleum Exporting Countries' (OPEC) will go ahead with its April output increase but may then consider other steps, including reducing production.

This prompted Phil Flynn, senior market analyst at Price Futures Group Inc., to comment with regards to trading drivers, "It's all Russia, Russia, Russia."

Flynn pointed out that traders on Friday all but ignored potentially crucial geopolitical news in the form of delays in Israel and Hamas seeking a permanent cease-fire in Gaza, amid growing tensions between the two factions.

But John Kilduff, founding partner at Again Capital, justified  trading behaviour by pointing out that "We're coming to terms with a lot of issues; there is a realization you shouldn't get too aggressive on either side of the issue."

Meanwhile, Trump's tariff threats against Canada, Mexico, and other countries are reportedly boosting prices t for heavy crude and raising refining costs; this prompted Vikas Dwivedi, global energy strategist for Macquarie Group, to say, "We have a distinctive shortage of heavy oils in the market."

Kpler added that global waterborne exports of heavy sour crudes have fallen by 385,000 barrels per day (bpd) in the past decade due to declining production from Venezuela and Mexico.

Interestingly, while Trump on Friday again delayed the Canada/Mexico tariffs until April, OilPrice.com noted that Canadian oil prices remained relatively stable this week, with the WCS Cushing differential to WTI consistently trading around -$3 per barrel, "suggesting that the oil industry never really fell for the tariff threat."

In other oil news on Friday, U.S. energy secretary Chris Wright estimated it would take $20 billion and years to refill the Strategic Petroleum Reserve to its maximum capacity, after former president Joe Biden sold nearly 300 million barrels from the reserve and driving the SPR to the lowest level in 40 years.

Also on Friday, in the wake of oil and gas companies resuming strategies to boost output of fossil fuels, Shell's subsidiary Sabah Shell Petroleum Company Ltd. announced first oil production from Phase 4 of the Gumusut-Kakap-Geronggong-Jagus East deepwater offshore development project.

Shell stated that this will deliver an additional combined 500,000 barrels of oil equivalent per day (boe/d) at peak production, thus fulfilling the company's to bring online new upstream projects between 2023 and 2025.