Oil market retreats on weak economic outlook, tariff-driven trade concerns

SINGAPORE: Oil prices slipped in early Asian trade on Monday, adding to last week’s steep losses as markets reacted to higher US tariffs, an increase in OPEC output, and signs that Washington and Moscow may be edging closer to a Ukraine ceasefire.

By 0041 GMT, Brent crude futures were down 52 cents, or 0.78 percent, at $66.07 a barrel. US West Texas Intermediate (WTI) crude dropped 58 cents to $63.30.

The latest pullback follows a 4 percent-plus slide last week, driven by concerns that a potential peace deal between the US and Russia could eventually lead to the easing of sanctions on Russian oil exports.

This comes after US President Donald Trump announced plans to meet Russian President Vladimir Putin in Alaska on August 15 to negotiate an end to the war in Ukraine.

While Trump has warned of tighter penalties on Moscow if no agreement is reached, he has also set conditions for lifting restrictions, including pressing India to scale back its Russian oil purchases.

Market watchers say US inflation data due Tuesday could also sway oil prices in the coming days. “A weaker-than-expected CPI reading would raise hopes for earlier and deeper Federal Reserve rate cuts, which could stimulate economic activity and boost oil demand,” said IG market analyst Tony Sycamore. “But if inflation runs hotter, fears of stagflation may grow and rate cuts could be delayed.”

Trump’s newly imposed tariffs on imports from dozens of countries, which took effect on Thursday, are adding further pressure to the global economy. Analysts warn these higher trade barriers could slow growth by forcing supply chain changes and driving up prices.

For the week ending Friday, Brent lost 4.4 percent and WTI fell 5.1 percent, underscoring the market’s bearish mood as economic uncertainty clouds the outlook for energy demand.