Oil prices witnessed an increase after a U.S. court ruled against President Trump’s tariffs. Market attention is currently directed towards the potential U.S. sanctions that could affect Russian crude flows, alongside OPEC+’s decision concerning increased output in July. Concerns regarding supply are escalating as a result of Chevron’s cessation of oil production in Venezuela. On Thursday, oil prices experienced an uptick following a U.S. court’s decision to prevent President Donald Trump’s tariffs from being implemented. Meanwhile, market participants remained vigilant regarding the possibility of new U.S. sanctions aimed at restricting Russian crude flows, as well as an impending OPEC+ decision concerning an increase in output for July. Brent crude futures increased by 81 cents, representing a rise of 1.25%, reaching $65.71 per barrel. U.S. West Texas Intermediate crude increased by 83 cents, or 1.34%, reaching $62.62 a barrel at 0102 GMT.
A U.S. trade court on Wednesday determined that Trump exceeded his authority by implementing blanket tariffs on imports from countries that export more to the United States than they import. The ruling has enhanced risk appetite across global markets, which have been apprehensive about the implications of the levies on economic growth. However, analysts caution that this relief may be short-lived, as the administration has indicated its intention to appeal.
“But for now, investors get a breather from the economic uncertainty they love to loathe,” said Matt Simpson, an analyst at City Index in Brisbane. On the supply front, there are apprehensions regarding the possibility of new sanctions on Russian crude. Simultaneously, the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, may reach an agreement on Saturday to expedite their oil production increases in July. Despite the sanctions imposed due to Moscow’s war on Ukraine, Russian oil has demonstrated a notable resilience. “It is hard to be convinced that any new U.S. sanctions on Russia will meaningfully dent Russia’s oil exports,” stated Commonwealth Bank of Australia analyst Vivek Dhar in a note.
In a development that exacerbates supply risks, Chevron has ceased its oil production and various other operations in Venezuela, following the revocation of its crucial license by the administration of U.S. President Donald Trump in March. In April, Venezuela cancelled cargoes scheduled for Chevron, citing uncertainties in payment linked to U.S. sanctions. Before that, Chevron was exporting 290,000 barrels per day (bpd) of Venezuelan oil, which accounted for over a third of the country’s total production. “From May through August, the data points to a constructive, bullish bias with liquids demand set to outpace supply,” Mukesh Sahdev, Global Head of Commodity Markets at Rystad Energy, said in a note, as he expects demand growth outpacing supply growth by 0.6 million to 0.7 million bpd.
On Thursday, attention will turn to the weekly reports from the American Petroleum Institute (API) and the Energy Information Administration, which serves as the statistical arm of the U.S. Department of Energy. Last week, U.S. crude oil and distillate inventories are expected to have increased, while gasoline stockpiles are anticipated to have decreased, according to an extended Reuters poll released on Wednesday. Market sources familiar with the API data indicate that U.S. crude and gasoline stocks experienced a decline last week, whereas distillate inventories saw an increase.