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Oil Prices Recover Slightly But U.S. Tariffs and OPEC Downgrade Weigh on Outlook

Oil prices saw a modest rebound in early trading, recovering slightly from recent declines. However, market sentiment remains under pressure due to renewed U.S. tariff threats and a downward revision of global oil demand by the Organization of the Petroleum Exporting Countries (OPEC).

Brent crude futures rose by 0.4% to trade near $82 per barrel, while West Texas Intermediate (WTI) crude climbed to approximately $78.70. Despite the slight uptick, gains were capped as traders weighed the broader macroeconomic risks and uncertain demand outlook. Reuters

U.S. Tariff Plans Shake Market Confidence

The Biden administration’s latest stance on trade policy has raised concerns among energy investors. Plans to impose new tariffs on certain foreign goods, including materials tied to the energy sector, have cast a shadow over global trade dynamics. Although the final list and implementation timeline remain unclear, fears of retaliatory measures and slower economic growth continue to influence oil prices. The Edge Malaysia

The prospect of weaker industrial activity due to rising protectionism has the potential to dent oil consumption, especially in emerging markets. For a commodity closely tied to economic expansion, the threat of trade disruptions is a significant downside risk.

OPEC Demand Forecast Downgrade Adds Pressure

Adding to the bearish undertone, OPEC revised its global oil demand forecast for the second half of the year. Citing slower-than-expected economic recovery in key markets such as China and the European Union, the organization now projects softer consumption growth than previously estimated. CNA

The downgrade follows a series of mixed data from China, where oil imports have shown uneven patterns amid fluctuating manufacturing activity and consumer demand. While the country remains a crucial driver of global oil consumption, doubts about the sustainability of its recovery are weighing on market sentiment.

OPEC’s revised outlook also reflects caution over the pace of central bank decisions globally, particularly as interest rates remain high in several regions, potentially curbing industrial output and fuel demand. 

Supply Factors Still Supportive, But Uncertainty Prevails

Despite demand-side headwinds, supply constraints continue to offer some support to oil prices. Voluntary production cuts from OPEC+ members and geopolitical tensions in key producing regions are helping limit downside movement. WION

Still, the overall tone remains cautious. With markets on edge over macroeconomic uncertainties, traders are closely monitoring developments in trade policy, central bank signals, and inventory data for further direction.

 

 

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