Oil Records Weekly Dip as Tariffs, Tensions Stoke Uncertainties
Oil prices are on track to post a weekly loss for the week ending Aug. 8, as mounting concerns over widening US tariffs and easing geopolitical risks outweigh support from declining inventories and expectations of a Federal Reserve (Fed) rate cut.
The international benchmark Brent crude was trading at $66.59 per barrel on Friday, marking a fall of around 3.9% from last week’s closing price of $69.27. Similarly, the American benchmark West Texas Intermediate (WTI) traded at $63.58 per barrel, a decrease of approximately 3% from last Friday’s close of $65.55.
Prices began the week higher after eight OPEC+ members, Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman, agreed to raise oil production by 547,000 barrels per day (bpd) in September from August levels.
The move is part of a gradual unwinding of 2.2 million bpd in voluntary cuts that began in April. Markets were supported by growing expectations that the Fed may cut interest rates in September.
San Francisco Fed President Mary Daly said the time for rate cuts is approaching, citing mounting evidence of a weakening US labour market and the absence of persistent inflationary pressures, including from tariffs.
Lower interest rates typically weaken the dollar and stimulate economic activity, thereby boosting oil demand. Prices climbed further on Wednesday after US President Donald Trump threatened higher tariffs on India for its continued imports of Russian oil.
Brent and WTI continued to rise on Thursday after Trump signed a decree imposing an additional 25% tariff on Indian imports. The measure will take effect in 21 days, with certain goods to be exempt during the transition period.
The market also found support from US Energy Information Administration data showing a 3 million-barrel drop in crude inventories and a 30,000 bpd decline in domestic production. Despite midweek strength, crude prices ended lower on Friday as concerns over global demand and easing geopolitical tensions dominated market sentiment.
Reports of potential peace talks between Trump and Russian President Vladimir Putin over the war in Ukraine also weighed on oil by easing global risk perceptions. If confirmed, the meeting would mark the first in-person talks between sitting US and Russian presidents since Joe Biden met Putin in Geneva in June 2021.
According to the Kremlin, both presidents agreed to meet in the “coming days” to discuss ending the war in Ukraine, as Trump’s deadline for Russia to agree to a ceasefire in Ukraine or face sanctions is due to expire today. #Oil Records Weekly Dip as Tariffs, Tensions Stoke Uncertainties#
