Oil prices steady as investors gauge the impact of US tariffs

Oil prices held steady on Friday, on track for weekly gains as investors assessed the impact of new tariffs and sanctions imposed by US President Donald Trump.

Brent crude futures fell by 35 cents, or 0.49%, to $71.35 a barrel as of 10:39 GMT. US West Texas Intermediate crude dropped 37 cents, or 0.53%, to $68.89.

Prices stabilized on Friday after losing more than 1% in the previous session, while both Brent and WTI remained on course for weekly gains of 4.3% and 5.7%, respectively.

Investor focus this week has been on the potential impact of US tariffs on oil prices, as a new round of tariffs on US trading partners took effect Friday.

Trump signed an executive order on Thursday imposing tariffs ranging from 10% to 41% on US imports from dozens of countries and territories that failed to reach trade agreements by the August 1 deadline, including Canada, India, and Taiwan.

Meanwhile, trade partners that managed to reach agreements with Washington included the European Union, South Korea, Japan, and the United Kingdom.

Subro Sarkar of DBS Bank said, “We believe the fact that many countries reached market-friendly trade deals – with few exceptions – was the main driver behind oil’s recent rise, and any further progress in trade talks with China could bolster market confidence even more.”

Oil prices also received additional support this week from Trump’s threat to impose secondary sanctions of 100% on buyers of Russian oil, in a bid to pressure Moscow to end its war in Ukraine. The threat raised fears of disrupted oil trade flows and potential supply removal from the market.

Carsten Fritsch, an analyst at Commerzbank, said, “It is simply not possible to fully replace Russian oil supplies, so effective sanctions will inevitably lead to a sharp increase in oil prices.”

In a related note, JPMorgan analysts said Thursday that Trump’s potential sanctions targeting China and India over their purchases of Russian oil could jeopardize around 2.75 million barrels per day of Russia’s seaborne oil exports. China and India are the world’s second and third largest oil consumers, respectively.

However, some analysts remain concerned that US tariffs may hamper economic growth by driving prices higher, which could in turn weigh on global oil demand.

Inflation data for June, released Thursday, showed signs that current tariffs have already begun to push up prices within the United States, the world’s largest economy and top oil consumer.