Oil prices slipped modestly on Thursday as investors assessed the potential impact of newly proposed US tariffs on global economic growth and demand for energy.

During early trading, Brent crude futures fell by 23 cents, or 0.3%, to $69.96 a barrel as of 09:04 GMT. Meanwhile, US West Texas Intermediate (WTI) crude dropped by 32 cents, or 0.5%, to $68.06 per barrel.

Trump Threatens Brazil with Punitive Tariffs

President Donald Trump has threatened Brazil—the largest economy in Latin America—with a 50% punitive tariff on its exports to the US, following a public rift with Brazilian President Luiz Inácio Lula da Silva.

Trump also announced plans to impose new tariffs on copper, semiconductors, and pharmaceuticals. His administration sent new tariff letters to countries including the Philippines and Iraq, adding to more than a dozen letters sent earlier this week to major US commodity suppliers such as South Korea and Japan.

Markets Cautious Despite Trade Escalation

Harry Tchilinguirian, head of research at Onyx Capital Group, commented that “markets are largely in a wait-and-see mode, given the unpredictable nature of political decision-making and the administration’s flexibility on tariffs.”

He noted that Trump’s previous track record of backtracking on tariff decisions has made markets less reactive to these announcements.

Fed Still Worried About Inflation

Federal Reserve officials remain concerned about inflationary pressures stemming from tariffs. Minutes from the central bank’s June 17–18 meeting showed that only “a few” members believed a rate cut could be appropriate soon, possibly starting this month.

Higher interest rates typically raise borrowing costs and can reduce oil demand.

Weaker Dollar Supports Prices

Offering some price support, the US dollar weakened during Asian trading Thursday. Kelvin Wong, senior analyst at OANDA, explained: “Since oil is priced in dollars, a weaker greenback makes it cheaper for holders of other currencies, boosting demand and prices.”

US Fuel Demand Shows Signs of Recovery

US Energy Information Administration (EIA) data released Wednesday showed a rise in crude stockpiles but declines in gasoline and distillate inventories over the past week.

Notably, gasoline demand rose by 6% to 9.2 million barrels per day last week, signaling a recovery in domestic fuel consumption.

Air Travel and Global Trade Continue Expanding

A client note from JPMorgan stated that global daily flight activity reached 107,600 flights during the first eight days of July—a record high. Chinese flight volumes hit a five-month peak, and port and shipping activity showed signs of continued global trade expansion compared to last year.

The note added, “Since the beginning of the year, average global oil demand growth is at 0.97 million barrels per day, in line with our forecast of 1 million bpd.”

Doubts Over Actual OPEC+ Output Increase

On the supply side, IG analyst Tony Sycamore noted skepticism over whether OPEC+’s latest quota increases will result in real production growth.

“Some members are already exceeding their official quotas, while others like Russia are unable to meet their targets due to damaged oil infrastructure,” he said.

OPEC+ is preparing to approve another significant production increase for September, which would complete the phase-out of voluntary cuts by eight members and implement a quota increase for the UAE.

The US dollar edged lower on Thursday morning, pulling back from a two-week high against major peers, as traders appeared largely unfazed by President Donald Trump’s newest round of tariff announcements.

As of 04:20 Eastern Time (08:20 GMT), the US Dollar Index—which measures the currency against a basket of six major rivals—was down 0.1% at 97.107, after hitting its highest level since June 25 during the previous session.

Trump Expands Tariff Campaign

President Trump once again stirred trade tensions by issuing new letters detailing tariff rates on imports from seven additional countries, adding to the 14 nations already notified earlier in the week.

He also confirmed a 50% tariff on imports from Brazil following a dispute with the country’s president and reiterated a similar tariff on copper imports, reinforcing earlier threats.

Despite the aggressive measures, currency markets remained largely steady—except for the Brazilian real—as traders continued to expect that deals with major economies such as India and the European Union could still be reached.

“The dollar is slightly offered this morning but remains largely on the sidelines amid the tariff chaos,” analysts at ING wrote in a note.

They added, “The question is, what would it take for the dollar to react meaningfully to Trump’s tariff maneuvers? We estimate the threshold remains high for now, but it may lower as we approach August 1. If there’s no tangible progress with key trading partners by then, it may become harder to ignore the tariff escalation.”

Economic Data Remains the Key Driver

ING emphasized that economic indicators—especially inflation and labor market data—continue to be the primary driver of dollar movements, particularly following the latest Federal Reserve minutes, which reaffirmed a cautious, hawkish-leaning stance from the FOMC.

Today’s focus will be on jobless claims, while next week’s Consumer Price Index (CPI) report is expected to have a more significant impact on currency markets than any trade headlines, ING said.

Euro Stable Amid Trade Deal Hopes

In Europe, the euro rose 0.1% against the dollar to 1.1731, as volatility in the single currency eased amid growing optimism for a trade agreement between the EU and the US.

European Trade Commissioner Maroš Šefčovič said Wednesday that good progress was being made on drafting a framework deal and that an agreement could be reached within days.

“Reports suggest that the draft EU proposal may include asymmetrical tariffs (likely a base rate of 10%), indicating a de-escalatory path,” ING noted. “This is likely already priced in, so unless there are major surprises in the details, EUR/USD may remain range-bound between 1.1700 and 1.1750 for now.”

British Pound Gains After Trade Pact

The British pound climbed 0.2% to 1.3608 after the United Kingdom signed a trade deal with the Trump administration, bolstering sterling sentiment.

Brazilian Real Plunges on Tariff Threat

In other currencies, the dollar dipped slightly against the Japanese yen to 146.29 and eased 0.1% against the Chinese yuan to 7.1775. Most Asian currencies held steady as investors processed the latest trade developments.

However, the US dollar surged 2.4% against the Brazilian real to 5.5766 after Trump vowed to impose a 50% tariff on all imports from Brazil.

Sources said the move was part of Trump’s angry response to what he perceives as mistreatment of his political ally, former Brazilian President Jair Bolsonaro.

Gold prices rose in European trading on Thursday, extending gains for a second consecutive session as the metal rebounded from a one-week low. The recovery pushed gold swiftly back above the $3,300 per ounce level, supported by weakness in the US dollar across currency markets.

Expectations for a Federal Reserve rate cut in September strengthened after the release of the central bank’s latest meeting minutes, which reinforced speculation about a shift toward monetary easing before the end of the year.

The Price

Gold prices climbed by 0.5% to $3,329.54, up from the opening level of $3,313.55, after touching an intraday low at $3,313.55.

On Wednesday, gold settled 0.4% higher, marking its first gain in three sessions, after hitting a one-week low earlier in the day at $3,282.73 per ounce.

US Dollar

The US Dollar Index fell by more than 0.2% on Thursday, recording its second straight session of losses. The index retreated from a two-week high of 97.84, reflecting continued pressure on the greenback against both major and minor currencies.

Trump’s latest round of tariffs failed to rattle global markets, except in Brazil, where the threat of a 50% tax sent the Brazilian real down as much as 2.8% overnight.

Fed Rate Outlook

The minutes from the Fed’s most recent meeting revealed that most policymakers view interest rate cuts as appropriate later this year.

Following the release, CME Group’s FedWatch Tool showed a rise in the probability of a 25 basis point cut in July from 5% to 8%, while the odds of holding rates steady slipped from 95% to 92%.

Expectations for a 25 basis point rate cut in September jumped from 62% to 72%, while the likelihood of no change dropped from 38% to 28%.

Gold Outlook

Matt Simpson, senior analyst at City Index, commented: “It seems that the market’s reaction to tariff headlines is fading with each new development. We’ve reached tariff fatigue, and traders need a fresh catalyst to wake volatility from its slumber.”

SPDR Gold Holdings

Holdings at the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by approximately 0.86 metric tons on Wednesday, bringing the total to 947.37 metric tons. That marked a rebound from Tuesday’s 946.51 metric tons, the lowest level since June 17.

The euro climbed in European markets on Thursday against a basket of global currencies, continuing its rebound from a two-week low against the US dollar. The rally was supported by reports of a potential trade agreement between the European Union and the United States.

According to informed European sources speaking to Reuters, the EU may avoid receiving a tariff notice from the US and could secure exemptions from the 10% US base tariff.

Recent key inflation data from Europe have added uncertainty to expectations of a European Central Bank rate cut in July. Markets now await more crucial economic indicators from the eurozone.

The Price

The euro rose 0.25% against the dollar to $1.1749, up from the day’s opening level of $1.1720, after touching a low of $1.1714.

On Wednesday, the euro ended nearly flat against the dollar after hitting a two-week low of $1.1682 the previous day.

US Dollar Weakness

The US Dollar Index fell by more than 0.2% on Thursday, marking its second straight day of losses and pulling back from a two-week high of 97.84. This reflects a continued retreat of the US dollar against major and minor currencies.

Trump’s latest round of tariffs failed to shake markets, with the exception of Brazil, where the threat of a 50% duty sent the Brazilian real down as much as 2.8% overnight.

Market sentiment was also buoyed by the Federal Reserve’s latest meeting minutes, which showed most policymakers believe rate cuts will be appropriate later this year.

Potential Trade Agreement

President Trump and several officials have recently stated that a deal with India is imminent, while the European Union is also moving toward a framework agreement.

According to Reuters, the EU is unlikely to receive a US tariff letter and may be granted exemptions from the 10% base tariff.

European Interest Rate Outlook

Headline CPI in Europe rose 2.0% year-on-year in June, matching market expectations, after a 1.9% increase in May.

Reuters sources indicate that a clear majority at the European Central Bank’s last meeting favored keeping interest rates unchanged in July, with some members calling for an extended pause.

Money market pricing for a 25-basis-point ECB rate cut in July remains steady at around 30%.

Investors are watching for upcoming economic data across the eurozone, as well as further commentary from ECB officials, to reassess the rate cut outlook.