Oil Prices Steady Amidst Trade Tariff Concerns
Oil prices remained stable on Tuesday as traders assessed the impact of recently imposed 25% tariffs on U.S. imports of steel and aluminum. These tariffs have raised concerns about potential implications for global economic growth and energy demand, particularly in the United States, the world's largest oil consumer.
Brent crude futures edged higher by 11 cents (0.14%) to trade at $75.98 a barrel, while U.S. West Texas Intermediate crude gained 5 cents (0.07%), reaching $72.37.
President Donald Trump's decision to impose these tariffs aims to support struggling industries in the U.S. However, the move may escalate trade tensions and trigger a multi-front trade war. The tariffs will affect millions of tons of imports from countries such as Canada, Brazil, Mexico, and South Korea.
Tariffs have the potential to dampen global economic growth and energy demand, thereby weakening oil prices. Last week, Trump postponed tariffs on imports from Mexico and Canada, as well as on Canadian crude oil, pending ongoing negotiations.
Additionally, the U.S. Federal Reserve has indicated that it will likely not cut interest rates again until the next quarter. This decision comes amid concerns about rising inflation. Maintaining higher interest rates could restrain economic growth, potentially impacting the demand for oil.
In terms of inventory levels, a recent Reuters poll suggests that U.S. crude oil and gasoline stockpiles likely increased last week, while distillate inventories may have decreased. The official industry report from the American Petroleum Institute will be released on Tuesday at 4:30 p.m. ET, followed by the Energy Information Administration report on Wednesday.