Oil headed for a third weekly decline as worries that President Donald Trump's tariffs on China will sap demand outweighed the new US administration's first round of sanctions against Iran.

West Texas Intermediate was steady near $71 a barrel, and is down almost 3% this week, while Brent crude closed above $74. Trump has slapped levies on all imports from China, with the world's biggest oil importer countering with its own more restrained measures, which will come into force on Monday.

The trade war — and the potential for it to spread — has stoked concerns that it will hamper growth in crude demand and lead to a glut later in the year. Trump has also pledged to boost US oil output, offsetting the sanctions on Iran, which may limit flows from the OPEC member. "With the majority of Iran's remaining oil exports going to China, we will be watching if the country's imports will be part of the broader US-China tariff dialog," RBC Capital Markets LLC analysts including Helima Croft said in a note. "However, questions remain about the duration of these measures and the potential rigor that will be applied to enforcement."

Crude has had a tumultuous week, soaring on Monday as sanctions were set to come into effect on Canada and Mexico — the two biggest foreign suppliers of crude to the US — before sliding as the measures were delayed by a month. It extended those declines to the lowest level this year as the conflict with China raised concerns about demand growth. 

There are also signs of a loosening in physical markets. Crude prices in Europe have slumped to multi-month lows on refinery maintenance, while the near-term timespread for Brent has narrowed to 45 cents a barrel in the bullish backwardation pattern, compared with around $1 in backwardation late last month.

Meanwhile, some technical indicators show this week's drop may have gone too deep, with the nine-day relative strength index near the 30 level that suggests oil is oversold.

WTI for March delivery was little changed at $70.60 a barrel at 8:48 a.m. in Singapore.

Brent for April settlement closed 0.4% lower at $74.29 a barrel.

Source : Bloomberg