Oil prices ease amid tariff uncertainty and likely Opec+ boost

New York — Oil prices fell slightly on Thursday as investors worried that US tariffs could slow energy demand ahead of an expected supply boost by major crude producers.

Brent crude futures settled 31 cents, or 0.45%, lower to $68.80 a barrel. US west Texas Intermediate crude fell 45c, or 0.67%, to $67 in thin trade on the eve of the Independence Day holiday.

US President Donald Trump’s 90-day pause on implementation of higher US tariffs ends on July 9, and several large trading partners have yet to clinch trade deals, including the EU and Japan. Oil traders are worried about the impact on the economy and fuel demand.

A preliminary trade deal between the US and Vietnam boosted prices on Wednesday, but overall tariff uncertainty looms large.

Also weighing on prices, Opec+ is expected to agree to raise output by 411,000 barrels per day at its policy meeting this weekend. Also, a private sector survey showed service activity in China — the world’s biggest oil importer — expanded in June at its slowest pace in nine months as demand weakened and new export orders declined.

In the US, a surprise build in crude inventories also highlighted demand concerns in the world’s biggest crude consumer.

The US Energy Information Administration said on Wednesday that domestic crude inventories rose by 3.8-million barrels to 419-million barrels last week. Analysts in a Reuters poll had expected a drawdown of 1.8-million barrels.

US energy firms this week cut the number of oil rigs by seven to 425, their lowest since September 2021, energy services firm Baker Hughes said in its closely followed report on Thursday. Oil rig count is an indicator of future output.

US job growth was solid in June while unemployment rates fell unexpectedly, data showed on Thursday. However, nearly half of the increase in nonfarm payrolls came from the government sector, with private sector gains slowing considerably as industries like manufacturing and retail grappled with Trump's aggressive tariffs on imports.

“Thursday's jobs report was stronger than expected, which shows that the resiliency we have been seeing in the economy over the past several months is still intact. We still expect the Federal Reserve to continue its wait-and-see approach on interest rates,” said David Laut, chief investment officer of Abound Financial.

Both contracts hit one-week highs on Wednesday as oil producer Iran suspended co-operation with the UN nuclear watchdog, raising concerns that the lingering dispute over its nuclear programme could again evolve into armed conflict.

Washington imposed new Iran-related sanctions on Thursday as well as sanctions targeting the Hezbollah network, the US Treasury Department website showed.

“For now, the market's going to take it in stride, because none of these efforts have worked in the past,” said John Kilduff, a partner at Again Capital.

Reuters