March 2 (UPI) -- Crude oil prices lost ground in early Friday trading, following equities markets lower in response to a U.S. call for aluminum and steel tariffs.
The Dow Jones closed down 420 points Thursday after President Donald Trump said he would officially impose a 25 percent tariff on steel imports and a 10 percent tariff for aluminum next week. Dow futures point to further losses in Friday trading.
Broader markets turned lower on concerns the Trump administration was sparking a trade war, even with some of the strongest U.S. allies.
"We will not sit idly while our industry is hit with unfair measures that put thousands of European jobs at risk," European Commission President Jean-Claude Juncker said in a statement.
Beijing foreign ministry spokeswoman Hua Chunying said at a regular news briefing that Washington is not in compliance with World Trade Organization standards, and that Director-General of Trade Remedy and Investigation Bureau of the Ministry of Commerce Wang Hejun had already made complaints.
Concerns about an overheated U.S. economy sparked inflationary fears in equities markets in early February, leading to heavy losses on the Dow. The downturn coincided with a correction in crude oil prices, which topped $70 per barrel in early January.
Sandy Fielden, the director for oil and products research at Morningstar, said the steel tariffs in particular could throttle the U.S. energy sector because of the increase for pipeline projects like Keystone XL.
"Adding 25 percent to the price of steel is going to increase that cost significantly," Fielden told UPI. "A lot of the investment is in labor, right of way, etc. but steel must be up there."
The price for Brent crude oil, the global benchmark, was down 0.52 percent to $63.50 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 0.36 percent as of 9:15 a.m. EST to $60.77 per barrel.
Ole Hanson, the head of commodity strategy at Saxo Bank, told UPI the price of oil might actually go up because of the tariffs.
"In the short term, however, the price risk is skewed to the downside given the potential impact on risk appetite as seen through lower stocks," he said.
The price of oil could react later in the day when Baker Hughes releases its weekly rig count report. A general metric to gauge activity in the exploration and production side of the industry, gains in North America in particular could pull the market lower because it would be a sign of potential gains in production.
The United States, at more than 10 million barrels of oil production per day, is on pace to become the world's largest producer. Energy trade groups, however, said steel tariffs would create industry headwinds.