Oil prices retreated during Tuesday's Asian trade, reversing part of the previous session’s gains as markets digested the impact of fresh United States tariff threats and a larger-than-anticipated production increase by the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) set for August.
By 3:15 pm AEST (5:15 am GMT), Brent crude futures fell by 35 cents or 0.5% to US$69.23 a barrel, while US West Texas Intermediate (WTI) crude declined by 39 cents or 0.6% to US$67.54.
The pullback followed a nearly 2% rally in the previous session, as investors reassessed the outlook for global oil demand amid new geopolitical developments.
On Monday, U.S. President Donald Trump formally notified trade partners - including key energy suppliers South Korea and Japan, as well as smaller exporters such as Serbia, Thailand, and Tunisia - that sharply higher U.S. tariffs will take effect from 1 August.
The tariff escalation has reintroduced market uncertainty and sparked renewed concerns over potential damage to the global economy and, by extension, oil demand.
The news follows the Organisation of the Petroleum Exporting Countries and its allies (OPEC+), agreement on Saturday to raise production by 548,000 barrels per day (bpd) in August.
The increase exceeds the 411,000 bpd monthly hikes seen over the previous three months and moves the bloc closer to fully reversing the 2.2 million bpd of voluntary cuts enacted earlier.
In a note to clients, ANZ analysts said: “The reaction suggests the market feels it’s well placed to handle the additional barrels of oil, despite fears of weak demand emanating from the uncertain economic backdrop.”
“Nevertheless, the spectre of another 548kb/d hike in September would raise the risk of inventories beginning to build as seasonal demand wanes,” the analysts added.
