Oil set for weekly decline as Trump tariff threat looms large

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Trump tariffs on Canada and Mexico could start this weekend

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Unclear if tariffs would exclude oil imports

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Russian sanctions dampen supply prospects

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OPEC+ to discuss U.S. output plans on Feb 3

(Updates prices at 1041 GMT, add analyst comment in paragraphs 4,8 and 11)

By Enes Tunagur

LONDON, Jan 31 (Reuters) - Oil prices edged down on Friday and were on course for a weekly decline as markets wait to see if U.S. President Donald Trump follows through on his threat to impose tariffs on Mexico and Canada this weekend.

Brent crude futures for March, which expire on Friday, fell 17 cents to $76.70 a barrel by 1041 GMT. U.S. West Texas Intermediate crude (WTI) was down 11 cents at $72.62.

For the week, the Brent and WTI benchmarks are set for declines of 2.3% and 2.8% respectively.

Oil came under pressure from the potential negative economic impact of U.S. tariffs against Canada, Mexico and China, said PVM analyst Tamas Varga, adding that potential appreciation of the dollar as a result of tariffs also weighed on oil.

Trump has threatened to impose a 25% tariff as early as Saturday on Canadian and Mexican exports to the United States if those two countries do not end shipments of fentanyl across U.S. borders.

Canada and Mexico are the two largest crude oil exporters to the United States, but it is unclear if crude oil would be included among the tariffs. Trump said on Thursday that he would soon decide whether to exclude Canadian and Mexican oil imports from the tariffs.

In 2023, the last full year of data, Canada exported 3.9 million barrels per day (bpd) of crude to the U.S., out of 6.5 million bpd of total imports, while Mexico exported 733,000 bpd, according to the U.S. Energy Information Administration.

"Punitive measures on Canadian and Mexican oil exports into the U.S. will be bullish," PVM's Varga said.

The market is also awaiting the OPEC+ meeting scheduled for Feb. 3.

Kazakhstan's energy minister said on Wednesday that the group is set to discuss Trump's plans to raise U.S. oil production and take a joint stance on the matter at next week's OPEC+ meeting.

"OPEC will likely comply with the U.S. demand to increase production to avoid Trump's ire. And they might announce a gradual unwinding of voluntary cuts, if not from April, then from the second half of the year," Varga said. (Reporting by Enes Tunagur in London Editing by David Goodman)