Oil traded in a narrow range as tariffs and sanctions threats unsettled global markets, weighing heavily on the outlook for energy demand. Brent hovered just above $70 a barrel, while West Texas Intermediate stayed above $68. Futures markets weakened as U. S. equity-index futures dropped following fresh trade tensions between Washington and key global partners.

U. S. President Donald Trump escalated tariff threats, targeting both the European Union and Mexico with 30 per cent duties and flagging potential levies against Brazil, the Philippines, Japan, South Korea and others. Markets interpreted this as a risk to economic momentum, especially in energy‐sensitive regions of Asia, denting crude demand expectations. At the same time, Asian buyers adopted a cautious stance, amplifying downward pressure on oil.

Against this backdrop, investors are eyeing a scheduled“major statement” from President Trump concerning Russia. Anticipation of new sanctions against the country, a major oil producer, lent modest support to prices that might otherwise have fallen further. Still, this support was checked by rising output from OPEC+ and a pause in geopolitical flare-ups in the Middle East.

Data from the International Energy Agency signals that global oil markets remain relatively tight. Summer driving seasons and increased refinery activity have buoyed demand, although analysts note that elevated output from Saudi Arabia-above its OPEC+ quota-puts a dent in any sustained rally. The kingdom disputes claims of non‐compliance, stating marketed crude remains within agreed limits.

Market watchers also flag OPEC+ plans to hike production by approximately 548,000 barrels per day in August, potentially followed by another boost in September. ING warns these moves could put the market into surplus in the final quarter of 2025. Additionally, the group revised its global demand forecasts downward for 2026–29, citing weakening growth in China.

Further clouding the outlook, heightened tariff uncertainty is exerting macroeconomic drag. The IEA forecasts a meaningful drop in global oil consumption growth for 2025, down a third from earlier projections, due in part to Trump's tariff measures. Analysts stress that inflationary pressures and slower global trade would dampen energy demand.

From a logistical standpoint, renewed Houthi tensions in the Red Sea have introduced another variable, interrupting shipping and supporting prices marginally. Still, Middle East volatility has largely receded compared with levels seen earlier this year.

Looking ahead, market players are set to digest a blend of geopolitical and macroeconomic signals. Key Chinese trade figures due soon may reveal shifts in demand. OPEC+ decisions on output will be scrutinised closely, as will the next moves in Washington's trade and sanctions policy. Meanwhile, U. S. gasoline consumption remains robust, with the Energy Information Administration reporting a 6 per cent increase to 9.2 million barrels per day-signalling that underlying demand has not yet faltered.

Oil markets are caught between supportive fundamentals-such as strong summer demand, supply constraints from Russia and geopolitical flare‐ups-and sobering headwinds from proposed tariffs, elevated output and macroeconomic uncertainty. Traders remain cautious, awaiting concrete policy developments from Washington, data releases from China, and steps by OPEC+ to navigate a market landscape that is anything but stable.

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