Oil prices slipped modestly on Thursday as investors assessed the potential impact of newly proposed US tariffs on global economic growth and demand for energy.
During early trading, Brent crude futures fell by 23 cents, or 0.3%, to $69.96 a barrel as of 09:04 GMT. Meanwhile, US West Texas Intermediate (WTI) crude dropped by 32 cents, or 0.5%, to $68.06 per barrel.
Trump Threatens Brazil with Punitive Tariffs
President Donald Trump has threatened Brazil—the largest economy in Latin America—with a 50% punitive tariff on its exports to the US, following a public rift with Brazilian President Luiz Inácio Lula da Silva.
Trump also announced plans to impose new tariffs on copper, semiconductors, and pharmaceuticals. His administration sent new tariff letters to countries including the Philippines and Iraq, adding to more than a dozen letters sent earlier this week to major US commodity suppliers such as South Korea and Japan.
Markets Cautious Despite Trade Escalation
Harry Tchilinguirian, head of research at Onyx Capital Group, commented that “markets are largely in a wait-and-see mode, given the unpredictable nature of political decision-making and the administration’s flexibility on tariffs.”
He noted that Trump’s previous track record of backtracking on tariff decisions has made markets less reactive to these announcements.
Fed Still Worried About Inflation
Federal Reserve officials remain concerned about inflationary pressures stemming from tariffs. Minutes from the central bank’s June 17–18 meeting showed that only “a few” members believed a rate cut could be appropriate soon, possibly starting this month.
Higher interest rates typically raise borrowing costs and can reduce oil demand.
Weaker Dollar Supports Prices
Offering some price support, the US dollar weakened during Asian trading Thursday. Kelvin Wong, senior analyst at OANDA, explained: “Since oil is priced in dollars, a weaker greenback makes it cheaper for holders of other currencies, boosting demand and prices.”
US Fuel Demand Shows Signs of Recovery
US Energy Information Administration (EIA) data released Wednesday showed a rise in crude stockpiles but declines in gasoline and distillate inventories over the past week.
Notably, gasoline demand rose by 6% to 9.2 million barrels per day last week, signaling a recovery in domestic fuel consumption.
Air Travel and Global Trade Continue Expanding
A client note from JPMorgan stated that global daily flight activity reached 107,600 flights during the first eight days of July—a record high. Chinese flight volumes hit a five-month peak, and port and shipping activity showed signs of continued global trade expansion compared to last year.
The note added, “Since the beginning of the year, average global oil demand growth is at 0.97 million barrels per day, in line with our forecast of 1 million bpd.”
Doubts Over Actual OPEC+ Output Increase
On the supply side, IG analyst Tony Sycamore noted skepticism over whether OPEC+’s latest quota increases will result in real production growth.
“Some members are already exceeding their official quotas, while others like Russia are unable to meet their targets due to damaged oil infrastructure,” he said.
OPEC+ is preparing to approve another significant production increase for September, which would complete the phase-out of voluntary cuts by eight members and implement a quota increase for the UAE.
