Investors Consider Supply Risks from Tariffs and Surprising US Crude Stocks Increase
Oil prices fell on Thursday as investors assessed the supply risks posed by US President
Donald Trump's push for a swift resolution to the conflict in Ukraine through tariffs, while an unexpected increase in US crude stockpiles also weighed on prices.
Brent crude futures for September dropped by 61 cents, or 0.83 percent, to $72.63 per barrel by 3:26 p.m. Saudi time.
US West Texas Intermediate crude for September fell by 68 cents, or 0.97 percent, to $69.32.
Both benchmarks experienced losses on Thursday after recording 1 percent gains the previous day.
Harry Tchiliguirian from Onyx Capital Group noted that investors are 'front-running' potential outcomes of Trump's policy announcements, acknowledging their volatility.
The US has threatened Russia with increased tariffs and warned China, the largest buyer of Russian oil, against continued purchases.
Additionally, the US Treasury Department imposed sanctions on more than 115 Iranian individuals, entities, and vessels as part of its 'maximum pressure' campaign against Iran.
This move follows a bombing campaign on Iranian nuclear sites in June.
Meanwhile, US crude oil inventories rose by 7.7 million barrels to 426.7 million barrels during the week ending July 25, influenced by decreased exports according to the Energy Information Administration.
Gasoline stocks dropped by 2.7 million barrels to 228.4 million barrels, exceeding forecasts for a draw of 600,000 barrels.
Fujitomi Securities analyst Toshitaka Tazawa pointed out that while US inventory data showed an unexpected increase in crude stocks, a larger-than-expected decline in gasoline inventories supported the notion of strong driving season demand.
This resulted in a neutral impact on the oil market.