Oil prices rose on Wednesday, maintaining their highest levels since June 23, supported by attacks on ships in the Red Sea, alongside concerns over sharp U.S. tariffs on copper and expectations of reduced oil production in the United States.

Brent crude futures rose by 48 cents, or 0.7%, to $70.63 per barrel by 08:55 GMT, while U.S. West Texas Intermediate crude climbed by 51 cents, or 0.8%, to $68.84 per barrel.

After months of calm in the Red Sea, attacks resumed last week in this vital global shipping route. Sources indicated that the Iran-backed Houthi militia in Yemen was behind the latest incidents.

A rescue operation is currently underway for the crew of a cargo ship that sank in the Red Sea following an attack that killed at least four crew members. The Houthis have not yet claimed responsibility for the strike.

Oil prices were also supported by a report from the U.S. Energy Information Administration released Tuesday, which projected lower oil output in 2025 compared to earlier forecasts, citing slower activity among American producers due to falling prices.

On Tuesday, U.S. President Donald Trump said he would announce a 50% tariff on copper imports, aiming to boost domestic production of the metal — vital for electric vehicles, military equipment, power grids, and a range of consumer goods.

This announcement came as Trump postponed some tariff deadlines to August 1, offering key trading partners hope that deals could be reached to ease the tariffs, though many companies remain uncertain about the future direction.

Despite concerns that tariffs may curb oil demand, strong travel activity during the U.S. Fourth of July holiday supported consumption, and data suggested a likely increase of 7.1 million barrels in U.S. crude stockpiles.

In a research note, oil brokerage PVM said: “With attacks in the Red Sea and increased summer fuel consumption in the U.S., expectations of a future supply glut should take a back seat to short-term realities.”

Official U.S. crude inventory data from the Energy Information Administration is due at 14:30 GMT.

Meanwhile, OPEC+ oil producers are preparing for another significant production boost in September as they continue to unwind voluntary supply cuts previously agreed upon by eight member states. The UAE is also transitioning to a higher production quota, according to five informed sources.

This follows the group’s Saturday announcement of a supply increase of 548,000 barrels per day for August.

Suvro Sarkar, head of the energy sector team at DBS Bank, said: “Oil prices have shown surprising resilience in the face of accelerating supply increases from OPEC+.”

UAE Energy Minister Suhail Al Mazrouei said Wednesday that oil markets are absorbing OPEC+ supply hikes without stockpile build-ups, indicating that markets are “thirsty” for more oil.

“You can see that even with the continuous increases over several months, we haven’t seen significant stockpile accumulation — meaning the market genuinely needed these volumes,” Mazrouei added.

The U.S. dollar climbed to its highest level against the Japanese yen in more than two weeks on Wednesday, following President Donald Trump's pledge to issue further trade-related announcements after imposing 25% tariffs on Japan and other trading partners.

The dollar had already posted gains against major currencies on Tuesday, buoyed by Trump’s latest tariff threats, which are set to take effect on August 1. However, he later signaled openness to extending the deadline if countries submit proposals.

Trump wrote on social media that announcements concerning “at least seven countries” would be made on Wednesday regarding trade, without providing further details. He also threatened to impose a 50% tariff on copper imports and said he would soon implement long-delayed tariffs on semiconductors and pharmaceuticals.

Despite the recent strength, the U.S. dollar index – which tracks the greenback against a basket of six major currencies – remains more than 6% lower since Trump unveiled a wave of reciprocal tariffs on April 2 as part of what he called “Liberation Day.” Those tariffs initially triggered a broad market selloff before most were postponed to allow time for bilateral trade negotiations.

Ray Attrill, head of FX strategy at National Australia Bank, noted that “the market’s second take on the reciprocal tariff announcements was actually negative for the dollar, based on the belief that the damage could be just as severe – if not worse – for the U.S. as it is for other countries.”

He added that “markets are still hesitant to take decisive positions given the prevailing uncertainty.”

The dollar rose 0.1% to 146.75 yen after touching 147.19, marking a weekly gain of 1.5% so far – its largest against the yen since mid-December.

Japan, a major export-driven economy and key U.S. trading partner, remains far from reaching a deal. The yen has weakened significantly ahead of the tariff deadline as multiple rounds of negotiations have failed to yield progress. Japanese policymakers are increasingly focused on crucial upcoming elections.

Speculation that opposition parties might win seats in the upper house and push for greater fiscal stimulus has weighed on Japanese government bonds this week, driving a sharp rise in long-term yields.

U.S. Treasury Secretary Scott Bessent, one of Washington’s lead negotiators with Tokyo, is expected to attend Expo 2025 in Osaka later this month, which could open the door to further discussions.

IG analyst Tony Sycamore noted that “talks appear to be stalled over the issue of rice market protections in Japan, and it’s hard to imagine the Japanese backing down on this demand.”

“The dollar’s rise against the yen was also supported by a continued rally in U.S. bond yields for a fifth consecutive day, along with a sharp climb in Japanese yields due to fiscal concerns ahead of the July 20 election.”

The euro remained steady at $1.171, as markets awaited clarity on whether the European Union would receive a tariff notice from Washington. According to EU sources cited by Reuters, there is cautious optimism that the bloc could be granted exemptions from the standard 10% rate.

Investors are also looking ahead to the release of the Federal Reserve’s latest meeting minutes later today, which may offer clearer insights into the path of U.S. monetary policy.

Commerzbank analyst Antje Praefcke said the euro’s strength against the dollar was also tied to interest rate differentials. “Markets are currently pricing in nearly two rate cuts from the Fed by year-end, compared to just one from the European Central Bank,” she explained.

The dollar index was flat at 97.60, while the British pound edged higher to $1.36.

The New Zealand dollar rose 0.1% to $0.60, after the local central bank held its benchmark rate steady as expected and flagged near-term inflationary risks.

Gold prices fell in the European market on Wednesday, deepening their losses for the second consecutive day. The metal dropped below the $3,300 per ounce level, hitting its lowest point in a week, under pressure from rising U.S. dollar levels in the foreign exchange market.

Markets are awaiting the release of the latest Federal Reserve meeting minutes later today, which are expected to offer strong clues regarding the likelihood of U.S. interest rate cuts in the second half of the year.

The Price

Gold prices declined by 0.5% to $3,284.51, marking the lowest level since June 30, down from the session's opening at $3,301.83. The intraday high was recorded at $3,308.02.

On Tuesday, gold settled down by 1.05% as safe-haven demand for the metal weakened.

U.S. Dollar

The dollar index rose by more than 0.2% on Wednesday, resuming gains that had paused briefly in the previous session. The index is nearing a two-week high of 97.84, reflecting broad strength in the U.S. currency against a basket of major and minor currencies.

President Donald Trump stated on social media that there would be announcements on Wednesday concerning "at least seven trade-related countries," without providing further details.

He also threatened to impose a 50% tariff on imported copper and said he would soon enact long-standing tariff threats on semiconductors and pharmaceuticals.

According to European sources cited by Reuters, the European Union is unlikely to receive a tariff letter and may be granted exemptions from the standard U.S. tariff rate of 10%.

U.S. Interest Rates

According to the CME FedWatch tool, the probability of a 25 basis point rate cut at the July meeting is currently priced at 5%, while the probability of maintaining current rates stands at 95%.

For the September meeting, markets are pricing in a 62% chance of a 25 basis point rate cut and a 38% chance of no change.

To reassess these probabilities, investors are closely monitoring the release of the Fed’s latest meeting minutes due later today.

Gold Outlook

Market strategist Ilya Spivak commented that gold has held up remarkably well this month despite rising yields and a strong U.S. dollar. Its ability to withstand pressure points to underlying strength and a bullish bias.

Spivak added that while this is a data-light week, the market’s response to the June FOMC meeting minutes may play a key role in shaping sentiment in the ongoing policy debate between the Fed and the markets.

SPDR Gold Trust Holdings

Holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by approximately 1.15 metric tons on Tuesday. The total now stands at 946.51 metric tons, marking the lowest level since June 17.

The euro declined in the European market on Wednesday against a basket of global currencies, resuming losses that had temporarily paused on Tuesday against the U.S. dollar. The currency edged closer to its lowest level in two weeks, following a renewed wave of trade-related statements from President Donald Trump, who recently imposed 25% tariffs on Japan and other trade partners.

According to European sources familiar with the matter, cited by Reuters, the European Union is unlikely to receive a tariff letter from the U.S. and may be granted exemptions from the standard 10% U.S. tariff rate.

Recent inflation data from Europe have increased uncertainty over the possibility of an interest rate cut by the European Central Bank in July, with markets awaiting more key economic data from the eurozone.

Price Action

The euro fell by 0.2% against the dollar to $1.1701, down from the day’s opening price of $1.1724. The currency recorded an intraday high of $1.1729.

On Tuesday, the euro closed up by 0.15% versus the dollar, having earlier touched a two-week low of $1.1682.

U.S. Dollar

The U.S. dollar index rose by more than 0.2% on Wednesday, resuming gains after a brief pause in the previous session. The index is now nearing a two-week high of 97.84, reflecting broad-based strength in the U.S. dollar against both major and minor currencies.

President Donald Trump announced on social media that there would be trade-related announcements on Wednesday involving "at least seven countries," without providing further details.

He also threatened to impose a 50% tariff on imported copper and reiterated long-standing threats of tariffs on semiconductors and pharmaceuticals.

Tariff Exemptions

European officials told Reuters that the EU is unlikely to be included in the new tariff directives and may receive exemptions from the standard 10% base U.S. tariff rate.

European Interest Rates

Headline inflation in Europe rose by 2.0% year-on-year in June, in line with market expectations, and up from a 1.9% increase in May.

According to Reuters, a clear majority at the European Central Bank's latest meeting favored keeping interest rates unchanged in July, with some members calling for a longer pause.

Money markets currently price in a 30% chance of a 25 basis point rate cut by the ECB in July.

To reassess these probabilities, investors are closely watching upcoming economic data from the eurozone, as well as comments from ECB policymakers.