Oil retreats as trade tensions raise demand concerns 

TOKYO: Oil prices fell on Thursday as fresh tariff threats by US President Donald Trump raised concerns among investors about the impact on global economic growth and energy demand.

Brent crude futures dropped 22 cents, or 0.31 per cent, to $69.97 a barrel by 0052 GMT, while US West Texas Intermediate (WTI) crude slipped 27 cents, or 0.39 per cent, to $68.11. 

Markets reacted nervously after Trump warned of a 50 per cent tariff on exports from Brazil, the largest economy in Latin America, following a public clash with Brazilian President Luiz Inacio Lula da Silva. 

The US president also outlined new tariff plans targeting copper, semiconductors, and pharmaceutical imports. His administration has reportedly sent tariff notices to several countries, including the Philippines, Iraq, South Korea, and Japan, intensifying trade tensions. 

The tariff uncertainty has also fed into inflation worries. Minutes from the US Federal Reserve’s June 17–18 meeting, released on Wednesday, showed only a few officials were open to cutting interest rates as early as this month. Higher interest rates tend to weigh on oil demand by making borrowing more expensive. 

However, some data offered support to oil prices. According to the US Energy Information Administration (EIA), crude oil stockpiles rose last week, while gasoline and distillate inventories declined. Gasoline consumption increased by 6 per cent to 9.2 million barrels per day, the EIA added. 

Meanwhile, global air travel and trade activity remained robust. J.P. Morgan reported that global daily flights averaged 107,600 in the first eight days of July, marking an all-time high. Flights in China also hit a five-month peak, with port and freight volumes pointing to continued growth in global trade. 

“So far this year, global oil demand growth is averaging 0.97 million barrels per day, closely matching our full-year forecast of 1 million barrels per day,” J.P. Morgan said in a client note. 

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