Oil Prices Decline Amid Tariff Rulings and OPEC Supply Concerns

Highlights:

• Oil prices fell for a second day, with Brent near US$66 and WTI around US$65, amid ongoing U.S. trade policy developments.
• A U.S. appeals court ruled that President Trump can continue enforcing global tariffs, increasing concerns over global demand.
• OPEC+ is restoring supply faster than expected, raising fears of a potential crude glut later this year.

Oil Extends Losses on Trade and Supply Headlines

Oil prices fell for the second consecutive day as global markets responded to a flurry of developments in U.S. trade policy and supply outlook. A U.S. federal appeals court has ruled that President Donald Trump may continue enforcing his global tariffs for now, a decision that weighed heavily on commodity sentiment. At the time of writing, Brent crude was trading close to US$66 per barrel, while West Texas Intermediate (WTI) hovered around US$65 per barrel. The court’s decision adds to broader concerns about international trade tensions, particularly as they relate to energy demand.

US-China Agreement Tempers Some Concerns

In a slight positive turn, the United States and China have agreed on a framework to implement previously agreed terms from negotiations in Geneva. This de-escalation may offer temporary relief to markets, but broader trade risks remain elevated. Crude markets have already been under pressure in 2025 due to the lingering impact of the Trump administration’s protectionist policies, which have clouded the global growth outlook and weakened investor interest in risk-driven assets such as oil.

Supply Surge Adds to Downward Pressure

Beyond demand-side risks, supply is also a concern. OPEC+ has begun restoring previously idled production faster than expected, sparking fears of a potential supply glut in the second half of the year.

Robert Rennie, head of commodity and carbon research at Westpac, noted that oil prices could test the lower boundary of the US$60–$65 range in the third quarter, with further declines possible in the fourth quarter as supply continues to outpace demand.

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