Oil prices nudged higher in early Friday trading in Asia, partially recovering from Thursday’s sharp decline as markets processed the potential fallout from escalating U.S. trade actions and shifting signals from OPEC+ regarding future supply plans.
By 01:47 GMT (21:47 ET), Brent crude futures for September delivery had risen 0.5% to $69.01 per barrel, while U.S. benchmark WTI crude gained 0.7% to reach $67.00. The modest uptick followed a nearly 2% drop in both benchmarks the previous session, driven by renewed demand concerns.
U.S. Tariff Escalation Stokes Demand Uncertainty
Fresh trade tensions were triggered after President Donald Trump unveiled a 35% tariff on Canadian imports starting August 1—an increase from previously threatened levels. The move is part of a broader push that also includes new levies on imports from South Korea and Japan, and a 50% duty on copper.
These measures have rattled investors, reviving fears that higher trade barriers could hinder global economic growth and in turn reduce oil demand. ING analysts noted that rising tariffs are “a clear headwind” for energy markets, especially given their impact on industrial activity and transportation.
OPEC+ Eyes Pause After Final Output Boost
On the supply side, attention turned to a Bloomberg report suggesting that OPEC and its allies may consider suspending further production hikes after a final planned increase in August. The bloc is set to complete a phased return of 2.2 million barrels per day, with a final 550,000 barrels expected next month.
Adding to bearish sentiment, OPEC on Thursday revised down its global oil demand forecast for the next several years, pointing to a slower-than-expected recovery in China’s economy.
While additional supply from OPEC+ will temporarily balance the market, analysts at ING believe more sustained downward pressure on oil prices could emerge later in the year, as the market shifts into surplus during the fourth quarter.
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