Crude oil prices recovered slightly on Thursday after a two percent drop earlier in the week as the market weighed the impact of fresh US tariff threats, a weaker demand outlook and signs of rising supply from OPEC+ members.
Brent crude rose by 0.28% to settle at $68.83 per barrel in early trade while West Texas Intermediate (WTI) moved up by 0.36% to $66.81 per barrel. The modest rebound comes as investors assess mixed signals for the global oil market heading into the second half of 2025.
Prices had retreated sharply following renewed concerns that the United States could expand import tariffs under the Trump administration, adding pressure to an already fragile demand outlook.
Analysts say the threat of additional trade restrictions could dampen economic growth prospects and curb oil consumption, particularly in major import markets.
In its latest update, the Organization of the Petroleum Exporting Countries (OPEC) trimmed its medium-term demand forecast, citing softer economic momentum in key regions including China.
The group now expects global oil demand to reach 106.3 million barrels per day (bpd) by 2026, lower than previous estimates.
Meanwhile, supply fundamentals remain under close watch as OPEC+ prepares to increase production. Member states plan to ramp up output by an additional 548,000 bpd in August—about 50,000 bpd higher than originally agreed.
The expansion could tip the market into a mild surplus later this year if demand fails to meet seasonal expectations.
Short-term support is coming from peak travel season in the US and continued disruptions in the Red Sea, where Houthi-linked attacks have forced vessels to reroute, tightening shipping lanes for energy cargoes.
Traders are also monitoring potential new US sanctions on Russian crude, which could temporarily bolster supply concerns and limit downside price swings.
However, the International Energy Agency (IEA) has flagged the slowest oil demand growth since 2009 for 2025, with projected annual demand expansion of just 700,000 bpd outside of any pandemic-related disruptions.
The IEA attributes this weakness to a combination of tariff risks, muted industrial activity and shifts toward renewable alternatives.
Market participants expect crude prices to remain range-bound in the near term as supply pressures and policy uncertainty counterbalance seasonal demand strength.
The focus will remain on upcoming OPEC+ meetings, US tariff decisions and the pace of global macroeconomic recovery for clearer signals on where the oil market heads next.
