Oil prices set for steepest weekly losses since June amid tariff concerns

Oil prices showed little movement in early Asian trading on August 8 but remained on track for their steepest weekly losses since late June, driven by concerns over escalating US tariffs and weakening global demand. Brent crude futures were down by three cents to $66.40 a barrel, on course for a decline of more than 4 per cent this week. US West Texas Intermediate (WTI) crude futures also dropped by six cents, or 0.1 per cent, to $63.82 a barrel, poised to fall by over 5 per cent on a weekly basis.

The downward pressure on prices intensified after the United States implemented higher tariffs on various trade partners on August 7, which raised fears about a slowdown in global economic activity. Analysts from ANZ Bank noted that reduced economic growth would likely dampen demand for oil, further weakening the market.

OPEC+ cuts and the unwinding of output cuts

The oil market had already been reeling from the decision by OPEC+ to unwind its largest tranche of output cuts in September, months ahead of schedule. This move added additional supply to the market, contributing to the downward pressure on prices. Till August 7, WTI futures had declined for six consecutive sessions, matching a streak not seen since December 2023. If prices settle lower on August 8 as well, this will mark the longest losing streak since August 2021.

Geopolitical developments add uncertainty

Further adding to the uncertainty, the Kremlin confirmed that Russian President Vladimir Putin would soon meet US President Donald Trump, raising hopes of a potential diplomatic resolution to the ongoing war in Ukraine. Meanwhile, new US tariffs against India for purchasing Russian crude oil also kept oil prices from falling further. However, analysts from StoneX warned that this measure is unlikely to significantly reduce the flow of Russian oil to global markets.

Kuwait’s Oil Minister, Tareq Al-Roumi, also weighed in on the situation, stating that oil prices are expected to remain below $72 per barrel in the near term. Al-Roumi emphasised that both Kuwait and OPEC are closely monitoring market conditions, particularly the ongoing US tariffs and the geopolitical developments involving Russia. Meanwhile, Kuwait Petroleum Corporation CEO Shaikh Nawaf Al-Sabah revealed that the country is currently producing 2.548 million barrels per day, in line with its OPEC+ commitments, but has the capacity to increase output as needed.

(With inputs from agencies)