Oil Slips Amid Fed Signals and Trump Tariff Threats

Crude posted a weekly loss as investors weighed the Federal Reserve’s slower approach to cutting interest rates and President-elect Donald Trump’s threat to impose tariffs on EU countries unless they buy more US oil and gas.

Brent futures settled little changed near $73 a barrel to cement a 2.1% drop for the week. West Texas Intermediate held steady above $69 a barrel, with the February contract down 1.9% this week.

Trump said he wants the European Union to conduct large-scale purchases of American oil and gas and threatened tariffs if they don’t, adding to wider economic concerns as the US government is facing an imminent shutdown over funding plans. The Federal Reserve on Wednesday scaled back the number of cuts it expects next year, signaling a more hawkish approach to inflation.

Crude pared losses and US equities pushed higher on Friday after the central bank’s preferred gauge of inflation came in muted for November, signaling that the selloff on the Fed’s announcement was overdone.

Still, the central bank’s signal that it will cut interest rate cuts fewer times next year is “not a very positive development for risk assets, oil being one of them,” said Bart Melek, global head of commodity strategy at TD Securities.

Crude has been rangebound since the middle of October, and prices are on course for their smallest annual trading band since 2019. Prices have been buffeted by weak Chinese demand and concerns over increased production, mainly from the Americas, as well as the prospect of tougher sanctions on Iran and Russia.

Group of Seven nations are exploring ways to toughen sanctions on Russian oil, according to people familiar with the matter. Although there’s no consensus yet on next steps, options under consideration range from an outright ban to lowering the price cap to about $40 a barrel from the current $60, they said.

Meanwhile in Russia, Transneft halted crude flows to Belarus and Europe via the Druzhba pipeline due to an unspecified technical malfunction, Reuters reported Friday, citing people familiar with the matter. The pipeline sends oil from Russia to Hungary, Slovakia and the Czech Republic, while also linking German crude from Kazakhstan.

Oil Prices:

• WTI for February delivery rose 0.1% to settle at $69.46 a barrel in New York.
• Brent for February settlement advanced 0.1% to $72.94 a barrel.