Oil Climbs Close to $1 Following Court Ruling Against Trump Tariffs

LONDON: On Thursday, oil prices increased by almost $1 a barrel after a U.S. court halted the majority of President Donald Trump's tariffs, with the market also monitoring possible new U.S. sanctions limiting Russian crude exports and an OPEC+ announcement regarding a rise in output for July. Brent crude futures increased by 96 cents, or 1.5 per cent, reaching $65.86 per barrel. U.S. West Texas Intermediate crude rose by 92 cents, or 1.5 per cent, reaching $62.76 a barrel at 0955 GMT. On Wednesday, a U.S. trade court determined that Trump exceeded his authority by applying blanket tariffs on imports from America's trading partners. The court was not requested to consider certain industry-specific tariffs that Trump imposed on automobiles, steel, and aluminum through a different statute.

"Markets are upbeat as Donald Trump faced losses regarding the tariffs," stated Bjarne Schieldrop, head commodities analyst at SEB. "That reduces the obstacles for the global economy, leading to increased oil demand as the machinery of the global economy operates more efficiently and swiftly." The decision lifted risk appetite in global markets that have been anxious about the effects of the tariffs on economic growth, but some analysts cautioned that the relief might be short-lived since the Trump administration announced it would appeal. "However, currently, investors enjoy a pause from the economic unpredictability they often dislike," stated Matt Simpson, an analyst at City Index in Brisbane.

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Regarding oil supply, there are worries about possible new sanctions on Russian crude oil. Simultaneously, the Organization of the Petroleum Exporting Countries and its partners, collectively referred to as OPEC+, might reach an agreement on Saturday to expedite oil production increases in July. "We're expecting the group to concur on an additional significant supply boost of 411,000 barrels daily." "We anticipate comparable rises continuing until the conclusion of the third quarter, as the group intensifies its efforts to protect market share," stated ING analysts in a report. In addition to supply concerns, Chevron has halted its oil production and several other operations in Venezuela, following the revocation of its vital license by the Trump administration in March.

In April, Venezuela cancelled shipments planned for Chevron, referencing payment ambiguities linked to U.S. sanctions. Prior to that, Chevron was exporting 290,000 barrels daily of Venezuelan oil, accounting for more than a third of the nation's total. "According to Mukesh Sahdev, Global Head of Commodity Markets at Rystad Energy, from May to August, the data indicates a positive, optimistic trend with liquids demand likely surpassing supply," he mentioned in a note, anticipating that demand increases will exceed supply increases by 600,000 to 700,000 bpd. Later on Thursday, market participants will be attentive to the weekly updates from the American Petroleum Institute (API) and the Energy Information Administration, which is the statistical division of the U.S. Department of Energy. As per market sources knowledgeable about the API data, U.S. crude and gasoline supplies decreased last week, while distillate reserves increased.