Written by The Banking Post
July 22:
Oil prices declined on Tuesday as escalating trade tensions between major economies, particularly the United States and the European Union, raised concerns over a potential slowdown in global economic activity and fuel demand.
Brent crude futures dropped 52 cents, or 0.75%, to $68.69 a barrel by 03:25 GMT, while US West Texas Intermediate (WTI) crude fell 51 cents, or 0.76%, to $66.69. Both benchmarks had settled marginally lower in the previous session.
The August WTI contract, which expires today, was trading at $66.69, while the more actively traded September contract was down 54 cents, or 0.82%, at $65.41, according to Reuters.
“Broad demand concerns continue to simmer amid escalating global trade tensions,” said Priyanka Sachdeva, Senior Market Analyst at Phillip Nova. “Markets are closely watching the latest tariff threats and President Trump’s potential announcements ahead of the August 1 deadline.”
Sachdeva also noted that investors are monitoring the possible implications of fresh US sanctions on Russian crude, which could disrupt supply chains.
Although earlier supply concerns have eased following increased output from major producers and a ceasefire in the Middle East—ending a brief flare-up between Israel and Iran on June 24—investors remain cautious. The focus has shifted to global economic uncertainty, spurred by shifting US trade policies and the threat of retaliatory tariffs.
A weaker US dollar provided limited support to crude prices, making oil more affordable for holders of other currencies. However, this was not enough to offset broader market jitters.
“Prices have slipped as trade war concerns offset the support from a softer dollar,” said Tony Sycamore, Market Analyst at IG. He also warned that tensions between Washington and Brussels could escalate, especially with the US threatening a 30% tariff on EU imports if no agreement is reached by August 1.
In a further sign of loosening supply conditions, Saudi Arabia’s crude exports rose in May to their highest level in three months, according to data from the Joint Organizations Data Initiative (JODI) released Monday.
Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) and its allies continue to unwind production cuts, gradually increasing output to meet market needs.
