Oil softens on US tariff uncertainty and OPEC+ output expectations
Brent crude futures fell 21 cents, or 0.3%, to $68.90 a barrel by 1217 GMT. U.S. West Texas Intermediate crude declined 15 cents, or 0.2%, to $67.30.
Both contracts had hit one-week highs on Wednesday as Iran suspended cooperation with the U.N. nuclear watchdog, raising concerns the lingering dispute over its nuclear programme could again devolve into armed conflict.
A preliminary trade deal between the U.S. and Vietnam also boosted prices.
Tariff uncertainty looms large, however. The 90-day pause on the implementation of higher U.S. tariffs ends on July 9, with several large trading partners yet to wrap up trade deals, including the European Union and Japan.
The OPEC+ group of oil producers, meanwhile, is expected to agree to raise output by 411,000 barrels per day (bpd) at its policy meeting this weekend.
Adding to negative sentiment, a private-sector survey showed that service activity in China - the world's biggest oil importer - expanded at its slowest pace in nine months in June as demand weakened and new export orders declined.
A surprise build in U.S. crude inventories also highlighted demand concerns in the world's biggest crude consumer.
The U.S. 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.
The market will be watching for the U.S. monthly employment report on Thursday, which is likely to shape expectations over the depth and timing of interest rate cuts by the Federal Reserve in the second half of the year, analysts said.
Lower interest rates could spur economic activity that would boost oil demand.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
3 hours ago
- Business Recorder
Oil dips ahead of expected OPEC+ output increase
CALGARY: Oil futures fell more than 1% on Friday, pressured by expectations that OPEC+ producers will decide this weekend to raise output and an Iranian reaffirmation of its commitment to nuclear non-proliferation. Brent crude futures were down 70 cents, or 1.02%, at $68.10 a barrel by 10:06 ET (1406 GMT) while U.S. West Texas Intermediate crude fell 72 cents, or 1.07%, to $66.28. Trade was thin due to the U.S. Independence Day holiday. Both contracts were on track for a small weekly gain, with Brent trading about 0.5% higher than last Friday's close and WTI around 1.2% higher. Eight OPEC+ countries are likely to make another oil output increase for August at a meeting on Saturday in their push toboost market share. The meeting was moved forward a day to Saturday. 'If the group decides to increase its output by another 411,000 barrels per day (bpd) in August, as expected, for the fourth successive month, oil balance estimates for the second half of the year will be reassessed and will suggest accelerated swelling in global oil reserves,' said PVM analyst Tamas Varga. Crude prices also came under pressure from a report on U.S. news website Axios, saying that the United States was planning to resume nuclear talks with Iran next week, while Iranian foreign minister Abbas Araqchi said Tehran remained committed to the nuclear Non-Proliferation Treaty. U.S. President Donald Trump said on Thursday that he would meet representatives of Iran 'if necessary' even as the U.S. imposed fresh sanctions targeting Iran's oil trade. Meanwhile, uncertainty over U.S. tariff policy was back in the spotlight as the end of a 90-day pause on higher levies approaches. Washington will start sending letters to countries on Friday, specifying what tariff rates they will face on goods sent to the United States, a clear shift from earlier pledges to strike scores of individual trade deals. 'The oil market might take on more of a direction next week once we have had the results of the OPEC+ meeting at the weekend and because Trump's tariff deadlines are due next week,' said Investec's head of commodities, Callum Macpherson. Separately, Barclays said it had raised its Brent oil price forecast by $6 to $72 a barrel for 2025 and by $10 to $70 a barrel for 2026 on an improved demand outlook.
Business Recorder
3 hours ago
- Business Recorder
Discount on Russian Urals oil shipped to India is smallest since 2022, traders say
MOSCOW/NEW DELHI: Discounts for Russia's flagship Urals crude oil for delivery to Indian ports in August shrank to their narrowest levels since 2022 amid high demand and shrinking spot supply, three traders in the grade's market said on Friday. Narrowing discounts and lower supply of spot Russian barrels will push Indian refiners to look for alternative oil like United Arab Emirates' Murban or U.S. West Texas Intermediate (WTI) grades, traders said. The narrowing discount shows how Moscow is managing to keep its oil sales up despite Western sanctions, while its discounted oil is getting more expensive than before, though still cheaper than alternatives. Spot discounts for Urals crude narrowed to $1.70-2 per barrel to dated Brent on delivery ex-ship (DES) basis on average for cargoes arriving in India in August, from $2 to $2.50 per barrel to dated Brent on DES basis in July, the traders said. That is the narrowest discount for Urals oil cargoes to dated Brent in Indian ports since the Ukraine war broke out in 2022. Meanwhile, as the Russian oil grade is traded against Brent benchmark, its outright price has been mostly below the West's $60 per barrel price cap since April this year, allowing Western companies to provide shipping and insurance service for the barrels. India's industrial output growth slows to nine-month low in May Urals oil prices are supported by high demand in India and Turkey, the two largest buyers of the grade, traders said. Turkey's imports of Russia's Urals crude rose in June to their highest level since May 2024 on healthy refinery margins and seasonal demand for motor fuels, LSEG data showed. Meanwhile, Urals oil loadings are set to decline in July from June amid higher refinery runs in Russia. Russian oil supply is also set to decline in August amid a planned shutdown for maintenance of output on the Sakhalin-1 project that exports Sokol oil. India has been the largest buyer of Russian seaborne crude after Moscow diverted its energy supply away from the European Union, which imposed a ban late in 2022. Several Indian refiners that normally buy Russian oil on the spot market are not getting enough Urals oil for delivery in August, the sources said. India is exploring building three new strategic oil reserves to boost its emergency stockpile and strengthen energy security. Large volumes of Russian Urals oil are shipped to India under the deal between the country's largest private refiner, Reliance Industries, and Russian oil giant Rosneft last year, limiting the crude offered in the spot market, traders said.
Business Recorder
4 hours ago
- Business Recorder
South African rand falls, US bill and tariff updates in focus
JOHANNESBURG: The South African rand fell on Friday as traders mulled the impact of U.S. President Donald Trump's sweeping tax-cut and spending bill and as pressure mounted on countries to secure trade deals before the United States' July 9 deadline. At 1251 GMT, the rand traded at 17.6250 against the dollar, roughly down 0.6% on Thursday's close. The U.S. Republican-controlled House of Representatives narrowly passed Trump's 'One, Big, Beautiful Bill' of spending and tax cuts. 'The upside to this bill is that it will likely boost U.S. demand in the short-to-medium term. The downside is that forecasts are pessimistic on whether it will successfully generate enough GDP growth to outpace the increased spending,' ETM Analytics said in a research note. Like other risk-sensitive currencies, the rand often takes cues from global drivers like U.S. policy and economic data in addition to local factors. South Africa and many other countries are scrambling to agree trade deals with the United States before the deadline. But the U.S. leader said Washington will start sending letters to countries on Friday specifying what tariff rates they will face on imports to the U.S., a clear shift from earlier pledges to strike scores of individual deals. Traders' domestic focus will be on June foreign reserves data on Monday and May manufacturing production figures on Thursday for insight into the health of Africa's most-industrialised economy. The Johannesburg Stock Exchange's Top-40 index was last down 0.2%. South Africa's benchmark 2035 government bond was slightly weaker, as the yield rose 1 basis point to 9.745%.
