Oil prices dipped slightly on Wednesday, easing from two-week highs reached the day before, as investors remained cautious amid ongoing uncertainty over new U.S. tariffs and anticipated increases in American crude stockpiles.
Brent crude futures were down 15 cents (0.2%) at $70 a barrel by 0601 GMT, while U.S. West Texas Intermediate (WTI) crude fell 16 cents (0.2%) to $68.17.
President Donald Trump’s decision to delay the imposition of new tariffs offered a temporary reprieve to major trade partners like Japan, South Korea, and the EU, raising hopes for potential deals. However, the delay left smaller exporters such as South Africa uncertain and businesses overall with little guidance. Trump extended the deadline to August 1—declaring it final—and reiterated that no further delays would be granted.
He also announced a 50% tariff on copper imports and signaled forthcoming tariffs on semiconductors and pharmaceuticals, escalating trade tensions and unsettling global markets.
According to Kelvin Wong, a senior market analyst at OANDA, bearish pressure on oil prices stemmed from the uncertainty surrounding the U.S.’s wide-ranging tariff plans and the potential for increased output from OPEC+.
Concerns are growing that these tariffs could dampen global oil demand. Despite strong travel demand over the U.S. Independence Day weekend, preliminary data suggested a build in U.S. crude stockpiles—possibly around 7.1 million barrels—though inventories of refined products declined.
ING analysts noted that the American Petroleum Institute (API) data was negative for oil prices, though the draw in refined products provided some support.
Markets now await official figures from the U.S. Energy Information Administration (EIA), due at 1430 GMT.
Meanwhile, OPEC+ producers are on track to significantly increase output in September, following plans to unwind voluntary cuts by eight member nations and the UAE’s adoption of a higher production quota. This comes after the group agreed on Saturday to raise supply by 548,000 barrels per day for August.
Despite the expected increase in supply, oil prices have remained resilient. Suvro Sarkar, head of the energy sector at DBS Bank, attributed this to strong seasonal demand and the likelihood that actual supply gains will be muted, as some producers may cut back to offset past overproduction.
Looking ahead, the U.S. is forecast to produce less oil in 2025 than previously estimated, according to the EIA’s latest monthly report. Falling prices have led producers to scale back activity in 2024, reducing output expectations for the following year.
