On Friday, oil dropped and held on track for its largest monthly fall in six months as notes from U.S. President Donald Trump extended up trade spat, weighing on the demand outlook.
Brent futures are move toward a 10 percent fall in May and WTI for a 13 percent plunge, their largest monthly losses since last November.
The international benchmark for oil prices, front-month Brent crude futures were at $65.72, tumble $1.15 from previous session’s close.
U.S. West Texas Intermediate (WTI) crude futures were at $55.85 per barrel, drop 74 cents from their preceding settlement.
Both grades earlier hit their lowest since March 8.
U.S. President Donald Trump vowed to impose tariffs on all goods from Mexico unless it prevents illegal immigration, firing up fears over financial development and appetite for oil.
“The decision, understandably, is sending shivers down investors’ spines,” PVM said in a note. “The mood is now definitely risk-off, and this is putting oil under pressure for the time being.”
“U.S. refiners import roughly 680,000 barrels per day of Mexican crude. The 5 percent tariff adds an extra $2 million to the cost of their daily purchases.”
The Mexico trade row adds to a trade spat between U.S. and China, which a lot of analysts anticipate to trigger a slump.
On Friday an official survey showed China’s factory activity withered more than anticipated in May.
Crude prices have also been under pressure from a return in U.S. oil production to a record 12.3 million barrels per day, and a much smaller than expected decline in U.S. stockpiles.
The U.S. Energy Information Administration (EIA) said crude stocks tumbled by around 300,000 barrels a week ago, to 476.49 million barrels.
That was much below the 900,000-barrel decline analysts had prediction in a news agency poll, and well less than the 5.3 million-barrel deescalate seen by the API industry body.
Top oil exporter Saudi Arabia’s rose output in May was not sufficient to compensate for lower Iranian exports, which shrunken after the United States tightened the screws on Tehran, a news agency survey found.
U.S. Special Representative for Iran Brian Hook said on Thursday Washington will sanction any country that purchases oil from Iran after the expiration of waivers on May 2.
In other news reported earlier on Thursday that countries like China and India that were issued waivers in November to purchase Iranian oil can remain the buys after May 2 until they reached a negotiated top.