Oil prices declined moderately on Thursday as investors weighed the potential impact of fresh tariff threats from U.S. President Donald Trump on global economic growth and energy demand.
Brent crude oil, against which Nigerian oil is priced, fell 23 cents or 0.3 percent to $69.96 a barrel by 10:04 a.m. in Nigeria, while U.S. West Texas Intermediate crude slipped 32 cents or 0.5 percent to $68.06 a barrel.
The market remains cautious following Trump’s renewed threats of punitive trade measures targeting major economies. On Wednesday, the U.S. president threatened Brazil with a 50 percent tariff on exports to the United States following a public dispute with Brazilian President Luiz Inacio Lula da Silva.
In addition to Brazil, the administration signaled plans for tariffs on copper semiconductors and pharmaceuticals and sent fresh tariff letters to the Philippines, Iraq, South Korea and Japan, among others.
Market participants say the frequent reversals in Trump’s tariff policies have tempered immediate price reactions.
“People are largely in wait and see mode given the erratic nature of policy making and the flexibility the administration is showing around tariffs,” said Harry Tchilinguirian, group head of research at Onyx Capital Group.
Concerns over inflation and the potential for higher borrowing costs have also weighed on oil sentiment. Minutes from the U.S. Federal Reserve’s June 17–18 meeting indicated only limited support for near-term interest rate cuts despite the added inflationary risk posed by tariffs.
Higher interest rates typically dampen oil demand by increasing financing costs across the economy.
However, the impact of trade tensions is being partially offset by other supportive factors. OANDA senior analyst Kelvin Wong said a weaker U.S. dollar in Asian trading lifted oil slightly by making dollar-denominated crude cheaper for other currency holders.
U.S. crude inventories rose last week while gasoline and distillate stockpiles fell according to data from the Energy Information Administration. Gasoline demand climbed 6 percent to 9.2 million barrels per day, reflecting seasonal travel strength.
Global daily flights averaged 107,600 in the first week of July, hitting an all-time high with Chinese flight volumes at a five-month peak, according to JP Morgan. Freight activity and port traffic also signal steady trade flows which support overall oil consumption.
JP Morgan noted in a client report that global oil demand growth year to date is tracking at 0.97 million barrels per day in line with its forecast of 1 million barrels daily for 2024.
On the supply side, analysts remain skeptical about whether OPEC+ producers can deliver on planned quota increases. Some member states are already producing above targets while others, like Russia, face constraints from damaged oil infrastructure, said Tony Sycamore, an analyst at IG.
OPEC+ is expected to approve another output boost for September as the group continues unwinding voluntary cuts by eight producers and adjusts the United Arab Emirates’ quota higher.
Despite near-term volatility, traders continue to monitor macroeconomic signals and geopolitical developments to gauge whether oil prices will find firmer direction in the weeks ahead.
