Crude oil prices took a dip today after hitting a two-week high earlier, as traders awaited updates on President Trump’s tariff plans, following the latest delay in trade deals with some key partners such as Japan and South Korea.
Brent crude was trading at $70.07 per barrel at the time of writing, with West Texas Intermediate changing hands for $68.26 per barrel. Both were slightly down from Tuesday’s close after President Trump postponed the entry into effect of tariffs on 14 partner countries from July 9 to August 1. Trump has said that “No extensions will be granted.”
U.S. trade partners face tariffs of between 25% and 40% as the U.S. president tries to eliminate their surplus, with one of his go-to offers being more energy commodity purchases. All of the countries that have been negotiating new trade deals have demonstrated a willingness to boost their purchases of U.S. oil and LNG.
Despite energy trade being one of the focal points of trade negotiations between the U.S. and its partners, the dominant perception about the effect of tariffs on oil prices is negative. Most analysts point to the effect of tariffs on the economy of countries being “punished” with them, and, consequently, on oil demand.
For now, such fears are premature, in light of the latest demand data from the United States. The data showed that a record number of Americans traveled for the July 4th weekend, according to AAA. The exact figure of the estimate was 72.2 million.
In further bullish news for oil prices, U.S. oil production this year is seen lower than estimated earlier because of the oil price slump from earlier in the year. In its latest Short-Term Energy Outlook, the U.S. Energy Information Administration said that U.S. oil production averaged 13.4 million barrels daily in the second quarter, and while it was a record high, the EIA added it expected virtually no growth from that level either this year or next.
By Irina Slav for Oilprice.com
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