Oil prices remained relatively stable on Friday following a decline of over 1% in the prior session, as traders assessed the implications of newly imposed higher U.S. tariffs, which could potentially dampen economic activity and reduce the growth of global fuel demand.
Brent crude futures experienced an increase of 4 cents, equivalent to 0.06%, reaching a price of $71.74 per barrel as of 1201 GMT. U.S. West Texas Intermediate crude experienced an increase of 1 cent, representing a 0.01% rise, reaching a price of $69.27. Brent prices are poised to increase by 4.9% for the week, while WTI is expected to rise by 6.4%. This follows U.S. President Donald Trump’s recent threat to impose tariffs on purchasers of Russian crude, specifically targeting China and India, in an effort to persuade Russia to cease its military actions in Ukraine.
On Friday, however, investors directed their attention towards Trump’s announcement of new, predominantly elevated, tariff rates on U.S. trading partners, which are scheduled to take effect on August 1. On Thursday, Trump enacted an executive order that establishes tariffs between 10% and 41% on imports from various countries and foreign regions, including Canada, India, and Taiwan, which did not finalize trade agreements by the stipulated deadline of August 1.
Certain analysts have cautioned that the imposition of levies may constrain economic growth by increasing prices, thereby exerting pressure on oil consumption. On Thursday, indications emerged that current tariffs are exerting upward pressure on prices in the United States, the largest economy and oil consumer globally.
In June, inflation in the United States saw an uptick, driven by tariffs that elevated prices for imported items, including household furniture and recreational products. This supports the perspective that price pressures are likely to increase in the latter half of the year, potentially postponing the Federal Reserve’s decision to lower interest rates until at least October. Keeping interest rates steady would likewise affect oil, as elevated borrowing costs may constrain economic expansion. Concurrently, Trump’s threats to impose 100% secondary tariffs on Russian crude buyers have bolstered prices due to apprehensions that such measures could disrupt oil trade flows and reduce the available supply in the market.
Analysts at JP Morgan indicated in a note on Thursday that Trump’s admonitions to China and India regarding potential penalties for their continued purchases of Russian oil could jeopardize 2.75 million barrels per day of Russian seaborne oil exports. The two nations rank as the second and third largest consumers of crude oil globally. The analysts noted, “The Trump administration, like its predecessors, will likely find sanctioning the world’s second-largest oil exporter unfeasible without spiking oil prices,” in reference to Russia.