Oil falls as concerns about demand amid US tariff upheaval return

Highlights:

• Concerns about US tariff effects reassert on oil prices
• US, Iran begin drawing up framework for nuclear deal
• Markets eye April PMI data this week

Oil prices fell 1.5% on Monday as investors once again focused on concerns US tariffs on its trading partners will create economic headwinds that will reduce fuel demand growth.

Brent crude futures slipped 97 cents, or 1.4%, to $66.99 a barrel at 0640 GMT after closing up 3.2% on Thursday. US West Texas Intermediate crude was at $63.72 a barrel, down 96 cents, or 1.5%, after settling up 3.54% in the previous session. Thursday was the last settlement day last week because of the Good Friday holiday.

"The broader trend remains tilted to the downside, as investors may struggle to find conviction in an improving supply-demand outlook, especially amid the drag from tariffs on global growth and rising supplies from OPEC+," said IG market strategist Yeap Jun Rong.

OPEC+, the group of major producers including the Organization of the Petroleum Exporting Countries and allies such as Russia, is still expected to hike output by 411,000 barrels per day starting in May, though some of that increase may be offset by cuts from countries that have been exceeding their quotas.

Prices also declined as some supply worries eased following signs of progress in nuclear talks between the United States and Iran progressed on Saturday.

In the talks, the US and Iran agreed to begin drawing up a framework for a potential nuclear deal, Iran's foreign minister said, after talks that a US official described as yielding "very good progress."

The progress follows further sanctions by the US last week against a Chinese independent oil refinery that it alleges processed Iranian crude, ramping up pressure on Tehran amid the talks.

Concerns about tightening Iranian oil supply and hopes for a trade deal between the United States and the European Union, pushed Brent and WTI up about 5% last week, their first weekly gain in three weeks.

Still, markets remain worried about the effects of the aggressive US tariff policy and its trade war with China, with the dollar and Asian equity markets dropping on Monday.

A Reuters poll on April 17 showed investors believe the tariff policy will trigger a significant slowdown in the US economy this year and next, with the median probability of recession in the next 12 months approaching 50%. The US is the world's biggest oil consumer.

Investors are watching for several US data releases this week, including April flash manufacturing and services PMI, for direction on the economy.

"This week's series of PMI releases could further underscore the economic impact of tariffs, with both manufacturing and services conditions across major economies expected to soften," IG's Yeap said, adding oil prices face resistance at the $70 level.