Oil Prices Steady as Markets Weigh Trump’s Tariffs, Dollar Weakness, and Fuel Demand
Oil prices held largely steady on Thursday, as investors balanced concerns over the potential economic fallout from U.S. President Donald Trump’s aggressive trade tariffs with supportive factors such as a weaker U.S. dollar and robust American gasoline demand.
By 0600 GMT, Brent crude futures edged up by 4 cents to $70.23 per barrel, while U.S. West Texas Intermediate (WTI) crude dipped 1 cent to $68.37 per barrel.
Market sentiment was cautious due to uncertainty over global economic growth, especially in Asia, where buyers are treading carefully, according to analytics firm Kpler. The firm also noted that geopolitical risk premiums have eased, helped by a sustained ceasefire between Israel and Iran.
On the political front, Trump escalated trade tensions by threatening Brazil—Latin America’s largest economy—with a 50% tariff on exports to the U.S. This followed a public disagreement with Brazilian President Luiz Inácio Lula da Silva.
In addition to targeting Brazil, the Trump administration has outlined steep tariffs on imports of copper, semiconductors, and pharmaceuticals, and issued tariff warning letters to countries including the Philippines and Iraq. These followed a broader wave of tariff communications earlier in the week directed at key U.S. trading partners, including South Korea and Japan.
Amid concerns that such trade actions could fuel inflation, the minutes from the Federal Reserve’s June 17–18 meeting showed that only a few officials were open to cutting interest rates this month. Elevated rates typically weigh on oil demand by increasing borrowing costs.
However, oil prices received support from a weaker U.S. dollar during Asian trading hours, which made oil more affordable for foreign buyers, according to Kelvin Wong, senior analyst at OANDA.
U.S. fuel data also helped bolster oil’s outlook. The Energy Information Administration (EIA) reported a rise in crude inventories last week, but gasoline and distillate stocks declined. Gasoline demand surged by 6% to 9.2 million barrels per day, according to the EIA.
Meanwhile, global air travel is on the rise, with daily flights averaging 107,600 in early July—a record high. Flight activity in China hit a five-month peak, and indicators from ports and shipping lanes suggest ongoing strength in global trade, JP Morgan noted.
“Global oil demand growth so far this year is averaging 970,000 barrels per day, aligning with our full-year forecast of 1 million barrels per day,” the bank stated.
On the supply side, there are doubts about whether OPEC+ will actually deliver on its planned production hikes for September. Tony Sycamore of IG pointed out that while output quotas are increasing, some members are already producing beyond their targets, while others, like Russia, face infrastructure limitations.
OPEC+ is expected to formalize another sizable output boost for September, completing the reversal of earlier voluntary cuts by eight members and adjusting the UAE’s quota upward.
