Oil prices dip as trade war concerns cloud demand outlook 

SINGAPORE: Oil prices fell on Tuesday as growing tensions between the US and European Union over trade sparked fears of slowing economic growth and weaker fuel demand, weighing on investor sentiment. 

Brent crude futures dropped 52 cents, or 0.75 per cent, to $68.69 a barrel by 0325 GMT. US West Texas Intermediate (WTI) crude slipped 51 cents, or 0.76 per cent, to $66.69 a barrel. Both benchmarks had already settled slightly lower in the previous session.

The August WTI contract is set to expire later today, while the more actively traded September contract fell 54 cents, or 0.82 per cent, to $65.41 a barrel.

“Concerns over global oil demand are lingering, especially with trade tensions heating up,” said Priyanka Sachdeva, senior market analyst at Phillip Nova. “Markets are closely watching new tariff threats between major economies, with potential announcements from President Trump expected before the August 1 deadline,” she added.

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Investors are also assessing the impact of fresh US sanctions on Russian crude, which could ripple across global markets.

Supply-side concerns have eased in recent weeks. Major oil producers have ramped up output, and a ceasefire on June 24 ended the conflict between Israel and Iran. However, uncertainty around the global economic outlook, fuelled by US trade policies, continues to worry markets.

A weaker US dollar has provided some support for oil, making it relatively cheaper for buyers using other currencies. Still, those gains have been offset by trade tensions. 

“Prices are slipping as fears over a trade war outweigh the support from a softer US dollar,” said IG market analyst Tony Sycamore. He also warned of a possible escalation in the tariff dispute between the US and EU. 

According to EU diplomats, the bloc is preparing a broader range of retaliatory measures as hopes for a trade deal with Washington dim. The US has threatened to impose a 30 per cent tariff on EU imports if no agreement is reached by August 1. 

Meanwhile, signs of rising global oil supply are also weighing on prices. The Organisation of the Petroleum Exporting Countries (OPEC) and its allies have begun to reverse earlier output cuts. In addition, Saudi Arabia’s crude exports in May rose to a three-month high, according to data released by the Joint Organizations Data Initiative (JODI) on Monday. 

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