Oil retreats on Trump's tariff threats, unexpected US inventory buildup

Oil prices fell on Thursday as investors assessed the supply risks stemming from US President Donald Trump’s push to quickly reach a resolution to the war in Ukraine by imposing additional tariffs, while a surprise buildup in US crude inventories also weighed on prices.

Brent crude futures for September delivery — set to expire on Thursday — dropped by 60 cents, or 0.8%, to $72.64 a barrel by 09:55 GMT. US West Texas Intermediate (WTI) crude for September delivery also fell by 58 cents, or 0.8%, to $69.42.

Both benchmarks had recorded 1% gains in Wednesday’s trading.

Harry Tchilinguirian of Onyx Capital Group said: “The market is reacting in advance to the implications of President Trump’s statements, then remembering that these policies could suddenly shift if he manages to strike a deal.” He added: “We are now seeing a reassessment until things become clearer.”

Trump had announced he would begin imposing measures on Russia, including 100% secondary tariffs on its trading partners, if no progress is made in ending the war in Ukraine within 10 to 12 days — a shortening of the previously set 50-day deadline.

The US also warned China, the largest buyer of Russian oil, that it may face steep tariffs if it continues its purchases.

Meanwhile, the US Treasury Department on Wednesday announced new sanctions on more than 115 individuals, entities, and ships linked to Iran, in an escalation of the “maximum pressure” campaign pursued by the Trump administration, following the bombing of Iranian nuclear sites last June.

Regarding supply, the US Energy Information Administration reported on Wednesday that US crude inventories rose by 7.7 million barrels to 426.7 million barrels in the week ending July 25, driven by a drop in exports. Analysts had expected a decline of 1.3 million barrels.

As for gasoline stocks, they fell by 2.7 million barrels to 228.4 million barrels, far exceeding expectations for a 600,000-barrel drop.

Toshitaka Tazawa, an analyst at Fujitomi Securities, said: “The US inventory data showed an unexpected increase in crude, but the larger-than-expected decline in gasoline stocks supported the view of strong demand during the driving season, leading to a neutral effect on the oil market.”