Oil prices slip as US tariff deadline, OPEC+ output hike loom

Oil prices slipped on Thursday after a strong rally in the previous session, as traders weighed the looming threat of higher US tariffs, signs of faltering demand in major economies, and expectations that OPEC+ will announce an output increase at its upcoming meeting. According to Reuters, Brent crude futures fell 45 cents, or 0.65 per cent, to $68.66 a barrel by 0645 GMT. US West Texas Intermediate (WTI) crude declined 44 cents, or 0.66 per cent, to $67.01 a barrel.

The losses follow a roughly 3 per cent surge on Wednesday, when prices hit their highest level in a week. That rally was driven by geopolitical jitters after Iran suspended cooperation with the United Nations nuclear watchdog, fuelling fears the long-running dispute over its nuclear programme could spiral into armed conflict. Additionally, a preliminary trade deal between the US and Vietnam offered some support to sentiment.

Tariff uncertainty clouds demand outlook

However, attention has now turned back to the uncertain outlook for global demand, with traders wary of fresh tariff risks. As per Reuters, the US is nearing the end of a 90-day pause on higher tariffs, which is set to expire on 9 July. Without new trade agreements in place with major partners such as the European Union and Japan, there is growing concern that Washington could reimpose steeper duties.

Analysts fear such a move could slow global trade and dampen fuel demand. ING analysts, cited by Reuters, noted that with both the tariff deadline and the US Independence Day holiday weekend approaching, many market participants will be reluctant to maintain large positions, reducing appetite for risk.

OPEC+ expected to raise output

The production outlook is also weighing on prices. According to Reuters, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, collectively known as OPEC+—are widely expected to agree to raise output by 411,000 barrels per day at their meeting this weekend.

Such an increase would add to global supply at a time when demand signals are already flashing warnings, potentially putting further pressure on prices in the weeks ahead.

Demand concerns deepen on China, US data

Reuters also reported that demand worries were compounded on Thursday by weaker-than-expected economic data out of China, the world’s biggest oil importer. A private-sector survey showed service-sector activity in China expanded at its slowest pace in nine months in June, with domestic demand weakening and new export orders declining.

Meanwhile, in the US, the world’s largest crude consumer, official data revealed a surprise build in inventories last week. The Energy Information Administration said crude stocks rose by 3.80 million barrels to 419 million barrels, defying analyst expectations in a Reuters poll for a drawdown of 1.80 million barrels. Weekly gasoline demand also fell to 8.6 million barrels per day, raising fresh concerns about consumption during the peak US summer driving season.

Eyes on US jobs data, Fed outlook

Traders are also awaiting key economic data to gauge the health of the US economy and the likely path of interest rates. Reuters noted that markets are keenly watching Thursday’s release of the US monthly employment report, which could help shape expectations around the depth and timing of potential Federal Reserve rate cuts later this year.

Lower interest rates could stimulate economic activity, which would be expected to support oil demand. However, signs of a cooling labour market may complicate that outlook. A private payrolls report released on Wednesday showed a contraction for the first time in two years, though analysts cautioned there is no direct correlation with the government’s official data.