WASHINGTON (dpa-AFX) - Crude oil decreased on Thursday due to concerns of slowing energy demand amid a high-tariff global economy along with the August 1 deadline set by the US President for countries to strike a trade deal with the US about to expire in hours.
Today, WTI Crude Oil for September delivery was last seen trading, down by $0.71 (or 1.01%) to $69.29 per barrel.
Last week, the EU's 18th sanctions package implemented on July 18 against Russia slammed an import ban on all refined products made from Russian crude oil originating from third countries.
Close on the heels of the EU sanctions, US President Donald Trump recently warned Russia to stop its war with Ukraine within 10-12 days (from earlier-announced 50 days) failing which to impose 100% secondary tariffs on Russia's trading partners. China and India are the primary destinations for Russian oil exports.
To mean what he said, yesterday Trump levied a 'penalty' on India for buying Russian oil over on top of an already-slammed 25% tariff. The country being the world's third-largest crude oil importer, its state refiners have paused buying Russian crude oil this week and are seeking supplies from the Middle East and West Africa.
The US has also warned China to await the same fate if it continues its purchase from Russia.
Recent US EIA data showed a surprise commercial crude inventory build of 7.7 million barrels for the week ending July 25. This brings the total stockpiles to 426.7 million barrels.
The same data showed gasoline stocks falling by 2.7 million barrels suggesting healthy demand.
In their upcoming meeting in August, select member-nations of the OPEC+ cartel are expected to raise crude oil production by 548,000 barrels per day in September. This would complete their earlier-planned 2.2 million bpd output increase.
While a pause or reversal of this could result in tighter supply, unchecked overproduction may driver prices lower.
On the monetary front, the US Federal Reserve's meeting yesterday concluded without any change in the interest rates. Fed Chair Jerome Powell also stated that the central bank has 'made no decisions' about a rate cut in September.
In the Middle East, the truce signed between Israel and Iran holds on still uneventfully.
However, the Red Sea attacks by the Yemen's Houthi rebels on two bulk merchant vessels resulting in their sinking and their recent warning that the attacks would continue on ships that have commercial ties with Israel have brought a new vexation for investors. As of now, ships are circumventing the Red Sea and thereby suffering increased transportation costs and hefty insurance premiums.
Oil and energy traders are opting for a balanced approach between the stabilizing role of OPEC+, compliance of member-nations, and the geopolitical flare-ups.
Analysts predict that the situation will become clearer by mid-August once a final tariff framework emerges.
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