Oil Prices Slip as Trade War Fears Raise Concerns Over Global Demand
Oil prices fell on Tuesday as escalating trade tensions between the United States and the European Union — both major crude consumers — stoked fears that a slowdown in economic activity could weaken global fuel demand.
As of 06:58 GMT, Brent crude futures were down 28 cents (0.40%) at $68.93 per barrel, while U.S. West Texas Intermediate (WTI) crude dropped 37 cents (0.55%) to $66.83 per barrel. Both contracts had already closed slightly lower on Monday.
The August WTI contract expires Tuesday, with the more actively traded September contract down 29 cents (0.44%), trading at $65.66 per barrel.
“Widespread demand concerns continue to simmer as global trade tensions escalate — particularly with markets closely watching President Trump’s looming tariff threats ahead of the August 1 deadline,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
She added that investors are also paying attention to the potential impact of new U.S. sanctions on Russian oil.
Supply Pressure and Policy Tensions
While earlier fears over supply disruptions have eased — especially after the June 24 ceasefire between Israel and Iran and increased production from major oil producers — traders remain uneasy about the broader economic implications of shifting U.S. trade policies.
The weaker U.S. dollar has provided some temporary support for oil prices, as it makes crude cheaper for buyers using other currencies. But this has been outweighed by fears of falling demand.
“Oil prices are being dragged down by rising trade war concerns, which are countering the support from a softer U.S. dollar,” noted Tony Sycamore, market analyst at IG.
Sycamore also pointed to the possibility of worsening U.S.-EU trade tensions, with the EU preparing a broader set of retaliatory measures as talks with Washington falter. President Trump has threatened to impose a 30% tariff on EU imports starting August 1 if no agreement is reached.
Rising Output Also Weighs on Prices
Adding to the bearish sentiment is a pickup in global oil supply. The Organization of the Petroleum Exporting Countries (OPEC) and its allies have continued to scale back earlier production cuts.
Data from the Joint Organizations Data Initiative (JODI) revealed that Saudi Arabia’s oil exports hit a three-month high in May, reinforcing market expectations of ample supply ahead.
