Oil slumped over 3% on Friday and posted its biggest monthly drop in six months, after U.S. President Donald Trump stoked global trade tensions by threatening tariffs on Mexico, a key U.S. trade partner and major supplier of crude oil. Brent crude futures fell $2.38, or 3.6%, to settle at $64.49 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell $3.09 to $53.50 a barrel, a 5.5% loss. Brent touched a session low of $64.37 a barrel, lowest since March 8. WTI hit $53.41 a barrel, weakest since Feb. 14. Brent futures posted an 11% slide in May and WTI a 16% drop, their biggest monthly losses since November.
Trump vowed on Thursday to ratchet up tariffs unless Mexico stopped people from illegally crossing into the United States. The plan would impose a 5% tariff on Mexican imports starting on June 10 and increase monthly, up to 25% on Oct. 1. That could hit the lucrative cross-border energy trade.
“U.S. refiners import roughly 680,000 barrels per day of Mexican crude. The 5% tariff adds an extra $2 million to the cost of their daily purchases,” PVM analysts said.