Oil Futures Drop on Resurgence of Tariff Concerns
HOUSTON, TX (DTN) --Oil futures fell on Thursday amid ample supply
fundamentals and trade tension after U.S. President Donald Trump threatened to
impose a 50% tariff on all goods imports from Brazil by August 1. The
announcement signaled a return to protectionist policies, setting a bearish
tone in the oil futures market.
Earlier in the week, the White House notified 22 trading partners of new
tariffs set to take effect August 1, dismissing the possibility of another
extension of the August 1 tariff deadline. On Tuesday, Trump announced a 50%
tariff on copper imports into the U.S. and a 25% tariff on pharmaceuticals and
semiconductors. While markets have become less reactive to tariff announcements
by the Trump administration, recent rhetoric has reignited concerns over a
potential shift toward a hawkish, high-tariff trade policy.
Higher tariffs are set to curb oil demand growth at a time when OPEC plans
to significantly ramp up production, elevating global oversupply concerns.
Eight member states shouldering some 2.2 million bpd in voluntary production
cuts, in place since 2023, aim to fully unwind those by the end of September.
Downward pressure in the oil futures market was also supported by U.S.
Energy Information Administration data released yesterday (7/9), showing that
domestic commercial crude oil stockpiles surged the most since January.
The EIA reported crude oil inventories surging by 7.1 million barrels last
week, marking the largest weekly build since January. In contrast, sizable
draws to gasoline and diesel inventories partially eased the bearish effect of
this surprising jump in crude oil stockpiles.
The front-month NYMEX WTI futures contract dropped by $1.51 to $68.87 bbl,
while the September ICE Brent futures contract fell by $1.31 to $70.19 bbl.
Downstream, August RBOB futures contract edged down by $0.0309 to settle at
$2.1575 gallon while the ULSD futures contract for August delivery fell by
$0.0142 to $2.3951 gallon.
In contrast, the U.S. dollar strengthened by 0.106 points to 97.300,
compared to a basket of foreign currencies.
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