Oil prices declined on Tuesday after climbing nearly 2% in the previous session, as investors assessed the latest developments regarding U.S. tariffs and OPEC+’s larger-than-expected production hike for August.

Slight drop in Brent and WTI futures

Brent crude futures fell by 12 cents, or about 0.2%, to $69.46 per barrel by 10:43 GMT. U.S. West Texas Intermediate (WTI) crude dropped 25 cents, or roughly 0.4%, to $67.68.

Mixed signals from Washington on tariffs

On Monday, President Donald Trump began notifying trade partners that elevated U.S. tariffs would take effect on August 1, but later clarified that the date was not “100% final.”

These conflicting messages added uncertainty to the markets amid concerns over the potential negative impact of tariffs on global economic activity and oil demand.

Pressure from OPEC+, support from geopolitical tensions

Analyst Yaniv Shah at Rystad Energy noted that prices are under pressure from OPEC+’s removal of voluntary cuts. However, tightness in middle distillate supplies and Houthi attacks on commercial vessels are lending some support to the market.

Unprecedented production hike for August

In its meeting on Saturday, the OPEC+ alliance — which includes the Organization of the Petroleum Exporting Countries and its allies — agreed to increase output by 548,000 barrels per day in August, surpassing the previous monthly increases of 411,000 barrels.

Investor optimism ahead of high-demand season

Investors entered the market with optimism ahead of the peak demand season in the U.S. Data from the U.S. Commodity Futures Trading Commission (CFTC) on Monday showed that money managers increased their net long positions in crude oil futures and options for the week ending July 1.

Warnings of downward price pressure in the fall

Analysts at HSBC warned that with seasonal demand cooling off, the rise in OPEC+ exports will weigh on the market and increase downside risks to prices.

Commerzbank forecasts that Brent crude may fall to $65 per barrel due to a build-up in excess supplies during the autumn months.

Near-total unwinding of voluntary cuts since 2023

The recent OPEC+ decisions effectively dismantle nearly all of the 2.2 million barrels per day in voluntary cuts that the group had implemented since 2023.

According to sources cited by Reuters, OPEC+ is expected to approve an additional increase of around 550,000 barrels per day for September at its upcoming meeting on August 3 — effectively eliminating the remaining production curbs.

The U.S. dollar held steady against most major currencies during Tuesday trading amid the ongoing trade escalation led by President Donald Trump's administration against other economies.

President Donald Trump had earlier warned countries aligning with the BRICS alliance’s policies — which conflict with American interests — that they would face additional tariffs of 10%.

Trump wrote on social media: “Any country that aligns with BRICS’s anti-American policies will face an additional 10% tariff. There will be no exceptions to this policy.”

Trump has long criticized the BRICS group, which includes China, Russia, and India among its members.

The United States had initially set July 9 as a deadline for countries to reach trade agreements, but U.S. officials now say tariffs will begin on August 1. Trump stated that he will send letters to countries informing them of the tariff rates if no agreements are reached.

However, on Monday, President Donald Trump announced that his administration will impose 25% tariffs on imports from South Korea and Japan starting August 1, as part of a new batch of letters to be sent to several foreign nations.

The White House also confirmed on Monday that President Trump will sign an executive order extending the temporary freeze on so-called “reciprocal tariffs” until August 1, granting targeted countries an additional three-week window to reach trade deals with the United States.

President Donald Trump’s administration has already notified 14 countries of new tariffs ranging between 25% and 40%, effective August 1.

As for trading levels, the dollar index remained weakly stable as of 11:06 GMT at 97.4 points, with a session high at 97.5 and a low at 97.1 points.

Gold prices rose in the European market on Tuesday after holding above the $3,300 per ounce barrier, supported by the current decline in U.S. dollar levels in the foreign exchange market.

President Donald Trump began informing his trade partners that the elevated tariffs will begin on August 1, marking a new phase in the trade war he launched earlier this year.

The Price

Gold prices today: Gold rose by 0.35% to ($3,345.84), from the opening level of ($3,336.72), with a session low at ($3,330.70).

At Monday’s settlement, gold prices were little changed after briefly touching a one-week low at $3,297 per ounce earlier in the session.

U.S. Dollar

The dollar index fell on Tuesday by 0.35%, retreating from a two-week high at 97.67 points, reflecting renewed weakness in the U.S. currency against a basket of major and minor currencies.

Aside from profit-taking, dollar levels are also falling amid renewed recession fears in the United States, after President Donald Trump announced 25% tariffs on goods imported from Japan and South Korea, in the latest development of his chaotic trade war.

Trump has begun informing his trade partners — from major suppliers like Japan and South Korea to smaller nations — that sharply higher U.S. tariffs will begin on August 1, later stating he is open to an extension if countries present proposals.

U.S. Interest Rates

According to the CME Group’s FedWatch tool: The probability of a 25-basis-point rate cut in the July meeting is currently priced at 5%, while the probability of rates remaining unchanged stands at 95%.

The probability of a 25-basis-point rate cut in the September meeting is currently priced at 62%, with a 38% probability of no change in interest rates.

To reassess these probabilities, investors are closely watching the minutes of the Federal Reserve’s latest policy meeting, due for release tomorrow, Wednesday.

Gold Outlook

Tim Waterer, Chief Market Analyst at KCM Trade, said: “Trump’s latest tariff rhetoric keeps gold in focus as a hedge against uncertainty, but the strength of the U.S. dollar and rising bond yields are limiting its immediate upside.”

Waterer added: “Traders appear relatively unfazed by Trump’s tariff talk, and with safe-haven demand largely contained at this stage, gold is still waiting for the right moment in anticipation of a potential breakout.”

SPDR Fund

Gold holdings at SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, remained unchanged yesterday for the third consecutive day, with total holdings at 947.66 metric tons, the lowest level since June 18.

The euro rose in the European market on Tuesday against a basket of global currencies, beginning to recover from a two-week low against the U.S. dollar, as renewed recession fears in the United States emerged after Donald Trump announced 25% tariffs on goods imported from Japan and South Korea, in the latest development of his chaotic trade war.

Recent key inflation data from Europe has increased uncertainty around the likelihood of a European rate cut in July, as investors await more important economic releases from the eurozone.

The Price

EUR/USD exchange rate today: The euro rose against the dollar by 0.5% to ($1.1765), from the opening price of ($1.1708), with a session low at ($1.1706).

The euro ended Monday’s session down by 0.55% against the dollar, marking the third loss in the past four days, and hitting a two-week low at $1.1686.

U.S. Dollar

The U.S. dollar index fell on Tuesday by 0.35%, retreating from a two-week high at 97.67 points, reflecting a renewed decline in the U.S. currency against a basket of major and minor currencies.

Aside from profit-taking, the U.S. dollar is also weakening due to renewed concerns about a potential recession in the U.S. economy, after President Donald Trump revealed 25% tariffs on goods imported from Japan and South Korea, in the latest twist in his chaotic trade war.

Trump has begun informing his trade partners — from major suppliers like Japan and South Korea to smaller nations — that sharply higher U.S. tariffs will begin on August 1, later stating that he is open to an extension if countries present proposals.

Opinions and Analysis

Carol Kong, currency strategist at the Commonwealth Bank of Australia, said: "There’s still a lot of uncertainty around where tariff rates will ultimately land, and which countries will get which rates, so global economic uncertainty remains elevated, and that will keep investors in a wait-and-see mode for now."

Kong added: "This is just the beginning, and we’ll definitely see more major trade headlines over the coming days."

European Interest Rates

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

According to Reuters sources, a clear majority at the latest European Central Bank meeting expressed a preference to keep interest rates unchanged in July, with some members calling for a longer pause.

Money market pricing for a 25-basis-point rate cut by the European Central Bank in July remains steady at around 30%.

To reassess these expectations, investors will be closely monitoring a range of upcoming economic data releases in Europe, along with commentary from ECB officials.