Oil prices slip on tariffs and supply uncertainty

[WORLD] Oil prices slipped by over 1% on Thursday, reversing earlier gains, as traders processed the impact of a US court decision striking down President Trump’s broad tariffs. While the court’s ruling initially boosted optimism, the market cooled as White House officials signaled they still had other legal tools at their disposal. Brent crude closed at $64.15 per barrel, while US West Texas Intermediate ended at $60.94, marking declines of 1.2% and 1.5%, respectively.

Investor focus also shifted to potential geopolitical developments. Ongoing talks between the US and Iran on nuclear activity, the possibility of new US sanctions on Russian crude, and uncertainty over Opec+ production decisions all weighed on sentiment. Fatih Birol, head of the International Energy Agency, added to the cautious tone by highlighting weak oil demand in China and lingering uncertainties around Russian and Iranian supply.

Meanwhile, market fundamentals offered a mixed picture. Chevron’s exit from Venezuela tightened supply, and Canadian wildfires briefly halted some output, but traders were also watching the Opec+ meeting where a production increase of 411,000 barrels per day was under discussion. A surprise US crude inventory draw of 2.8 million barrels, revealed by the Energy Information Administration, helped limit the day’s price declines.

Implications

For businesses, especially in the energy and manufacturing sectors, the court ruling introduces more legal uncertainty rather than immediate relief. While some tariffs may be blocked, others—like those on autos, steel, and aluminum—remain intact, meaning companies should continue hedging against trade policy volatility. Energy firms, in particular, must stay alert to shifts in global supply from geopolitical tensions and Opec+ decisions.

Consumers might not see immediate price changes at the pump, but longer-term trends could push prices higher if supply disruptions persist. Chevron’s pullout from Venezuela and potential Russian sanctions could tighten global oil markets, even as Opec+ boosts production. Weak demand from China may counterbalance this somewhat, but gasoline and diesel prices often respond more to headline risks and perceived shortages than to pure demand metrics.

From a policy perspective, the US government faces a delicate balancing act. Pressuring adversaries like Iran and Russia while managing domestic energy prices is politically sensitive, especially in an election cycle. The court ruling could also complicate trade negotiations, forcing the administration to recalibrate its tariff strategies and legal defenses while maintaining its geopolitical objectives.

What We Think

The markets’ sharp intraday reaction, followed by a pullback, underscores how deeply oil prices are tied to perceptions of political risk—not just supply and demand fundamentals. “Not much has changed,” as one analyst put it, reflects how investors have become conditioned to tariff and sanction headlines, waiting for real-world impact before making lasting bets.

Opec+’s upcoming production decision is critical. While the group appears ready to raise output, the key question is whether this increase can outpace potential supply hits from Russia and Venezuela. If not, the market could quickly tighten, especially if demand recovers in China or elsewhere.

For now, we believe businesses and policymakers alike should prepare for continued oil price swings. The interplay of legal battles, diplomatic negotiations, and natural disruptions (like the Canadian wildfires) makes stability elusive. Energy companies might find opportunities in the volatility, but consumers are likely to bear the brunt through more erratic fuel prices.

In the bigger picture, this episode illustrates how intertwined trade, energy, and foreign policy have become. It’s no longer possible to treat these as separate domains—what happens in a courtroom or a Vienna Opec meeting can ripple out to gas stations and grocery stores worldwide. Staying informed and nimble will be crucial in the months ahead.