Oil prices showed little movement on Thursday as traders weighed the potential fallout from US President Donald Trump’s latest tariff threats against key economies, Cape {town} Etc reports.
According to Reuters, a weaker dollar and strong US gasoline demand provided some support, offsetting concerns over slowing global growth.
Brent crude futures edged up 4 cents to $70.23 a barrel, while US West Texas Intermediate (WTI) crude dipped 1 cent to $68.37. Analysts noted a cautious buying environment in Asia due to economic uncertainty, while geopolitical risks, including tensions in the Middle East, have eased.
Tariff threats rattle markets
Trump escalated trade tensions this week, threatening Brazil with a 50% tariff on exports to the US after a public clash with Brazilian President Luiz Inácio Lula da Silva, as per the BBC. His administration also sent tariff warnings to the Philippines, Iraq, and other nations, adding to earlier letters targeting major suppliers like South Korea and Japan.
The Federal Reserve’s latest meeting minutes revealed concerns among policymakers about inflation risks from these tariffs. Only a few officials suggested interest rate cuts could come as early as this month. Higher rates typically dampen oil demand by making borrowing more expensive.
Demand signals mixed
Despite trade worries, US gasoline demand surged 6% last week to 9.2 million barrels per day, according to the Energy Information Administration (EIA). A weaker dollar also lent support by making oil cheaper for foreign buyers.
Global air travel hit record highs in early July, with China’s flight activity reaching a five-month peak. JP Morgan noted strong trade activity, keeping oil demand growth on track at nearly 1 million barrels per day this year.
Analysts doubt whether OPEC+’s recent production quota hikes will translate into actual supply increases. Some members, including Russia, struggle with damaged infrastructure, while others already exceed their limits. The group is expected to approve further output boosts for September, but market impacts remain uncertain.
The oil market remains caught in a delicate balance, with opposing forces pulling prices in different directions. The Federal Reserve’s cautious stance on interest rates adds another layer of complexity, as policymakers weigh inflationary risks against the need to sustain economic momentum.
Meanwhile, OPEC+’s planned production increases may not materialise as expected, given operational challenges among key members. Russia’s infrastructure woes and quota violations by other producers suggest that actual supply gains could fall short of official targets.
For now, traders appear to be taking a wait-and-see approach, neither aggressively buying nor selling as they assess how these competing factors will play out. The coming weeks will be critical; any escalation in trade tensions or unexpected supply disruptions could quickly shift the market’s direction.
As investors balance tariff risks against demand signals, oil prices remain in a holding pattern, for now.
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