US West Texas Intermediate (WTI) crude futures were down 6 cents, or 0.1 percent, at $72.88 per barrel.
Oil markets opened cautiously lower on Friday ahead of a raft of import tariffs set to be imposed later in the day by the world’s two biggest economies, the United States and China.
International Brent crude oil futures were at $77.18 per barrel at 0043 GMT, down 21 cents, or 0.3 percent, from their last close.
US West Texas Intermediate (WTI) crude futures were down 6 cents, or 0.1 percent, at $72.88 per barrel.
The United States has announced the introduction of tariffs on Chinese goods, which are planned to be raised at 12:01 a.m. Washington DC time (0401 GMT) on Friday.
China has said it would immediately retaliate with its own tariffs, and U.S. President Trump said on Thursday the United States may ultimately impose tariffs on more than a half-trillion dollars worth of Chinese goods, in what may become a fully blown trade war.
“Things will get worse before they get better on trade… between the U.S. and China,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.
Beijing has said it may include a 25 percent tariff on U.S. crude oil imports, although it has not specified a date on which it would include that duty.
American crude shipments to China currently stand around 400,000 barrels per day (bpd), worth around $1 billion a month at current market prices.
TARIFFS, SANCTIONS, DISRUPTIONS
A Chinese import tariff would make US oil uncompetitive in China, forcing its refiners to seek alternative supplies elsewhere.
That would happen in a global oil market that has steadily tightened this year.
Energy consultancy FGE this week issued a stark warning of looming supply shortages due to US sanctions against Iran and also because of disruptions elsewhere.
“Iran’s exports are some 2.7 million bpd, including condensate,” it noted.
FGE said the US government may grant some waivers to allies that are particularly reliant on Iranian supplies and that some Iranian oil would also be smuggled into global markets. It estimated that once US sanctions are fully implemented, some 1.7 to 2 million bpd of crude and condensate would be taken out of the market.
“At the same time, Venezuela can do nothing to stop its own production decline and will lose another 400,000 bpd by year-end with production going to below 1 million bpd,” FGE said, adding that another 300,000 bpd of Libyan capacity was disrupted.
Although Saudi Arabia and Russia have both said they would raise output to make up for these disruptions, FGE said “there simply is not enough capacity to make up for Iran’s crude losses, plus Venezuela and Libya”, and warned of the possibility of oil prices rising to $100 per barrel.
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