Oil prices dropped for the third time in four trading sessions as investors weighed the effects of renewed U.S. tariff threats and the decision by OPEC+ to increase output starting next month. Global benchmark Brent crude fell toward $69 per barrel, while West Texas Intermediate (WTI) slipped below $68, reflecting a cautious tone across energy markets.
The price movement followed U.S. President Donald Trump’s announcement of a new wave of trade duties targeting key partners. Though the tariffs are not scheduled to take effect until August 1, their looming presence raised immediate concerns over global demand, especially in energy-intensive sectors. Trump left the door open for negotiations, but market sentiment remained fragile.
In contrast to the bearish reaction, OPEC and its allies confirmed a larger-than-expected supply increase for August, signaling growing confidence in market absorption capacity. Officials pointed to seasonal demand, particularly in Asia, as justification for restoring some of the group’s previously withheld barrels. In line with this, Saudi Arabia raised the official selling price of its main crude grade bound for Asian buyers.
Still, optimism was tempered by continued geopolitical tension. Although a temporary ceasefire is holding between Israel and Iran, unrest in the Red Sea has resurfaced. On Monday, a second vessel was attacked near Yemen, just hours after Iranian-backed Houthi rebels claimed responsibility for an earlier strike in the same region.
“These attacks raise supply-chain costs and insurance premiums for oil cargoes,” said Haris Khurshid, Chief Investment Officer at Karobaar Capital LP. “But unless there’s a major supply disruption, the impact stays mostly at the margins.”
In the refined products market, a separate trend is emerging. Diesel inventories in the United States have fallen to their lowest seasonal level since 1996, and European diesel futures suggest tightening supply conditions. Traders are watching these developments closely as they could create short-term price divergence between crude oil and refined fuels.
Looking ahead, much depends on whether Trump’s tariff proposals move forward and how OPEC+ members comply with their output increases. Analysts are also keeping a close eye on signs of further volatility in the Middle East.
“Any new OPEC+ signals about extending or adjusting supply cuts will be critical in guiding near-term price direction,” Khurshid added.
With the second half of the year underway, the oil market remains caught between rising geopolitical risks, shifting policy moves, and a fragile balance between supply and demand.
