DTN Oil Update
Oil Futures Drop Amid Trade Tensions, Tariff Deadline
HOUSTON (DTN) -- Oil futures were under downward pressure on Tuesday, amid expectations of a global oil demand slowdown, as the government of the United States is expected to impose tariffs on multiple trading partners starting on Aug. 1, following a 90-day pause.
The front-month NYMEX WTI futures contract fell by $0.87 to $66.33 bbl, while September ICE Brent futures contract decreased by $0.80 bbl to $68.41 bbl.
August RBOB gasoline futures dropped by $0.0200 to $2,1119 gallon, and the front-month ULSD futures contract fell by $0.0669 to $2.4423 gallon.
The U.S. dollar weakened by 0.115 points to 97.455 against a basket of foreign currencies.
Over the weekend, Commerce Secretary Howard Lutnick stated that Aug. 1 is a "hard deadline" for countries to begin paying tariffs to the United States. Trading partners, including EU and Mexico, have been threatened with a 30% trade tariff starting on the first day of August. In April, the Trump administration announced a three-month pause on most U.S. tariffs, to give countries an opportunity to negotiate deals and avoid steeper trade tariffs.
Potential sanctions on U.S. trading partners are expected to affect global oil consumption and the U.S. economy by adding inflationary pressures and weakening the currency.
"The consensus view is probably that the (U.S.) dollar can lose more ground on a higher average U.S tariff rate, but the euro's ability to benefit from it may depend on whether the EU gets sucked into a major tit-for-tat escalation," ING Research said in a note this morning.
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