Oil prices declined in early Asian trading on Tuesday as markets assessed that European sanctions on Russia would have a minimal effect on global supply. At the same time, growing concerns over a potential trade dispute between the United States and the European Union also weighed on prices.
Despite the U.S. dollar weakening significantly from recent highs, crude futures showed little upward momentum. Brent crude for September delivery dropped 0.5% to $68.86 per barrel, while West Texas Intermediate futures fell 0.5% to $65.61 per barrel as of 21:15 ET (01:15 GMT).
Rising Tensions in US-EU Trade Relations
Markets remain uneasy amid escalating tensions between Washington and Brussels regarding tariff policies. Reports indicate the U.S. is pushing for a minimum 15% tariff on European imports, a move that caught EU officials off guard and sparked calls for retaliatory tariffs on American goods.
Analysts at ANZ cautioned that a prolonged trade stalemate could dampen economic growth and reduce oil demand, particularly if the U.S. implements steep tariffs on EU products. In addition to tariffs targeting the EU, the U.S. plans to impose significant duties on other major trading partners starting August 1, including 25% on Japan, 35% on Canada, and 50% on Brazil.
These high tariff rates have raised concerns about their potentially disruptive impact on the global economy, which could in turn curb oil consumption.
Sanctions on Russia Have Limited Effect
Meanwhile, the EU’s recent tightening of sanctions on Russia’s oil sector provided little support to prices. ANZ analysts expressed skepticism that the new measures would significantly reduce Moscow’s oil exports.
The sanctions relate to the ongoing Russia-Ukraine conflict, now over three years old and showing little sign of resolution. While the war initially pushed oil prices to near record levels, markets have since largely factored in the risk of supply disruptions arising from the conflict.
However, strict U.S. sanctions on Russia’s oil industry remain firmly in place.
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