Oil Prices Dip as Trade War Tensions and Rising Supply Weigh on Market

Highlights:

• Brent crude fell 0.75% to US$68.69; WTI dropped 0.76% to US$66.69 at the time of writing.
• Trade war fears and rising oil supply continue to pressure prices.
• A softer U.S. dollar provides limited support amid broader economic concerns.

Crude Prices Slide Amid Fears of Slower Fuel Demand

At the time of writing, global oil benchmarks fell as concerns mounted over a potential trade conflict between the United States and the European Union. Investors worry that the escalating tensions will curb global fuel demand by slowing economic growth. Brent crude dropped 52 cents, or 0.75%, to US$68.69 per barrel, while U.S. West Texas Intermediate (WTI) fell 51 cents, or 0.76%, to US$66.69.

WTI August Contract Nears Expiry as Market Shifts to September

The August WTI futures contract is set to expire Tuesday, with the more actively traded September contract down 54 cents, or 0.82%, at US$65.41. Analysts note that persistent concerns over a slowdown in demand are overshadowing recent easing of supply-side pressures.

Analysts Warn of Ongoing Trade and Sanction Risks

Priyanka Sachdeva, a senior market analyst at Phillip Nova, highlighted that markets are closely watching fresh tariff threats and potential U.S. sanctions on Russian crude. She cautioned that these developments could further dampen market sentiment.

OPEC Output Increases and Geopolitical Calm Eases Supply Fears

The recent ceasefire between Israel and Iran, along with rising output from major oil producers, has helped alleviate previous supply concerns. OPEC and its allies have also been gradually unwinding production cuts, contributing to increased market supply.

Weak Dollar Offers Limited Support

A weaker U.S. dollar has offered some support for crude prices, making oil cheaper for buyers using other currencies. However, IG market analyst Tony Sycamore noted that escalating trade tensions between the U.S. and EU are offsetting this advantage.

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