WASHINGTON (dpa-AFX) - Crude oil prices fell on Friday, as demand concerns due to potentially reduced consumption in oil and energy increased amid a new tariff regime kickstarted by the US government.
Today, WTI Crude Oil for September delivery was last seen trading down by $1.92 (or 2.77%) at $67.34 per barrel.
In an historic move, US President Donald Trump reordered the global economy by signing an executive order to impose new tariffs on 69 countries trading with the US, with levies ranging anywhere from 15% to 41%. The tariffs are set to take effect from August 7 to give room for officials to prepare for the tax collections.
Nations that are yet to sign a trade deal with the US are scrambling to find a middle path in the negotiations to solve this prolonging problem.
Unable to gauge the future impact of a high-tariff global trade regime, global stock markets reverberated.
In the US today, data on jobs released by the Labor Department revealed that job growth was weaker than it was believed to be previously.
Data on consumer prices released yesterday also revealed that prices for home furnishings and durable households galloped 1.3% in June indicating prices in the US are shooting upwards in the evolving tariff ecosystem.
Baker Hughes Company data released today revealed that crude oil rigs in the US decreased to 410 from 415 in the previous week and total rigs in the US decreased to 540 in the week ended August 1 from 542.
On the geopolitical front, the Red Sea has become a new flashpoint for oil and trade disruption.
Yemen's Houthi rebel group have threatened that all ships of companies having tie-ups with Israel will be attacked if they cruise via Red Sea.
Global shipping routes, supply chains, and insurance markets are feeling the pressure due to this threat as ships have to detour which results in significant time delay and cost addition.
Trump had earlier warned Russia to find ways to end the war with Ukraine in the next 10-12 days or face high tariff imposition. His threat also included 'secondary sanctions' to countries buying oil from Russia. So far, Russia has not demonstrated any willingness for a ceasefire.
A 'penalty' threat by US has forced state oil refineries of India to halt their purchases from Russia. Notably, India is the world's third largest crude oil importer.
The Trump administration has granted sanctions waiver to Chevron to resume operations in Venezuela. When the global oil major begins pumping, significant addition could be seen on the supply side.
OPEC+ member-nations are meeting on August 3 to decide on the unwinding of the production cuts further. The earlier 548,000 barrels per day September target remains in place.
OPEC+ has 1.66 million bpd of sidelined supply, scheduled to stay offline until next year. Questions remain on whether the alliance would revisit the idle 1.66 million bpd now or in the future.
Traders are worried that an exorbitant tariff regime would act against consumption and thereby lower the demand for oil and energy, consequently weighing on oil prices.
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