The crude oil market depreciated slightly on Thursday as investors worried that the US tariffs could slow energy demand ahead of an expected supply boost by major crude producers under the Organisation of the Petroleum Exporting Countries and its allies (OPEC+).
The price of Brent crude shed 31 cents or 0.45 per cent to $68.80 a barrel and the US West Texas Intermediate (WTI) crude fell by 45 cents or 0.67 per cent to $67.00 per barrel.
President Donald Trump’s 90-day pause on implementation of higher US tariffs ends on July 9, and several large trading partners have yet to clinch trade deals.
While deals have been reached with the United Kingdom and Vietnam, some top economies like the European Union and Japan have yet to reach an agreement and this could see tariffs resume.
Although the preliminary trade deal between the US and Vietnam boosted prices on Wednesday, overall tariff uncertainty looms large.
Also weighing on prices is the expectation that OPEC+ will raise output by 411,000 barrels per day at its policy meeting this weekend.
Similarly, a private-sector survey showed service activity in China, the world’s biggest oil importer, expanded in June at its slowest pace in nine months as demand weakened and new export orders declined.
In the US, the world’s largest producer, a surprise build in crude inventories also highlighted demand concerns in the world’s biggest crude consumer. The US Energy Information Administration (EIA) said on Wednesday that domestic crude inventories rose by 3.8 million barrels to 419 million barrels last week.
US job growth was solid in June while unemployment rates fell unexpectedly, data showed on Thursday.
However, nearly half of the increase in nonfarm payrolls came from the government sector, with private sector gains slowing considerably as industries like manufacturing and retail grappled with Trump’s aggressive tariffs on imports.
The US Treasury Department on Thursday unveiled fresh sanctions targeting Iran’s covert oil trade and Hezbollah-linked financial activity, putting pressure on Iran even as Chinese refiners continue importing Iranian crude at high volumes.
The sanctions hit a smuggling network run by Iraqi businessman Salim Ahmed Said, who the Treasury says has been disguising Iranian oil as Iraqi crude since 2020 and generating billions in revenue for Iran. Several vessels were also sanctioned for aiding the operation, part of what the US calls Iran’s “shadow fleet.”
Analysts expect the trend to continue, especially after President Trump said last month that China was free to buy Iranian oil.