Oil Prices Drop as White House Clash, Tariffs, and Iraq Exports Shake Markets

Oil prices fell on Friday, marking their first monthly decline since November, as geopolitical tensions, U.S. tariffs, and Iraq’s oil export plans impacted the market. Brent crude settled at $73.18 per barrel, while WTI closed at $69.76. A heated exchange between Trump and Zelenskiy over a Ukraine cease-fire raised concerns about increased Russian oil supply. New U.S. tariffs on Mexico, Canada, and China added to market volatility. Iraq announced plans to resume Kurdistan oil exports, though major firms hesitated due to payment concerns. Increased Iraqi output may challenge OPEC+ quotas. OPEC+ is debating delaying planned production hikes. Seasonal trends could push oil prices higher leading up to Easter.

Oil Prices Drop as White House Clash, Tariffs, and Iraq Exports Shake Markets

Oil prices dropped on Friday, marking their first monthly decline since November, as investors reacted to escalating geopolitical tensions in Washington, newly announced U.S. tariffs, and Iraq’s decision to restart oil exports from the Kurdistan region. Brent crude futures, which expired the same day, closed at $73.18 per barrel, down 86 cents (1.16%), while U.S. West Texas Intermediate (WTI) crude settled at $69.76 per barrel, dropping 59 cents (0.84%). Both benchmarks were set for their first monthly losses in three months.

Market volatility increased after a heated on-camera exchange in the Oval Office between U.S. President Donald Trump and Ukrainian President Volodymyr Zelenskiy over a potential cease-fire in the Russia-Ukraine conflict. Trump’s stance, which suggested a more favorable position toward Russia, raised concerns about an increase in Russian oil supply, according to John Kilduff, a partner at Again Capital LLC. The dispute ended with Trump threatening to withdraw support for Ukraine, leading Zelenskiy to leave the White House without finalizing an agreement on joint mineral resource development.

Further weighing on the oil market were Trump’s latest tariff measures, including a 25% duty on imports from Mexico and Canada and an additional 10% tariff on Chinese goods, set to take effect on March 4. Analysts, including Ole Hansen from Saxo Bank, warned that the ongoing trade war could slow global economic growth, drive inflation, and ultimately reduce crude oil demand as traders adjust their risk exposure.

Meanwhile, Iraq announced plans to resume oil exports from the semi-autonomous Kurdistan region via the Iraq-Turkey pipeline, initially shipping 185,000 barrels per day through state marketer SOMO, with gradual increases expected. However, eight international oil firms operating in Kurdistan refused to restart exports, citing uncertainty over commercial agreements and payment guarantees.

The increase in Iraqi exports also raised concerns over the country’s compliance with OPEC+ production limits, as it has frequently exceeded its agreed-upon quota, noted Harry Tchilinguirian of Onyx Capital Group. With Iraq already producing above its designated levels, analysts fear that the additional exports from Kurdistan could further strain OPEC+ unity and complicate future policy decisions. If Iraq continues to surpass its output limits, it may trigger tensions within the alliance, potentially prompting other members to push for stricter enforcement or even reconsider their own production commitments.

Additionally, an oversupply of oil in the market could exert downward pressure on prices, challenging efforts to stabilize crude markets. Investors are now closely watching whether OPEC+ will adjust its strategy to account for the increased supply or maintain its current production targets. Some experts suggest that if Iraq’s exports continue rising, OPEC+ may be forced to delay planned production hikes to balance the market.

As OPEC+ deliberates whether to proceed with its planned 120,000 barrels per day production increase in April or delay it due to an unclear supply outlook, analysts suggest any postponement could drive oil prices higher. Phil Flynn of Price Futures Group highlighted that oil, gasoline, and diesel markets typically show a bullish trend leading up to Easter, which could further support a price surge if production adjustments are made.