WTI remains subdued below $69.00 amid potential impact of upcoming US tariffs on economy

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West Texas Intermediate (WTI) Oil price extends its losses for the second successive session, trading around $68.70 per barrel during the Asian hours on Friday.

WTI price struggles amid growing demand concerns, fueled by fears that US tariffs could negatively impact the global economy.
President Trump has imposed higher tariffs on US trading partners, with new rates set to take effect on August 1.
Oil prices are on track for a weekly gain of over 6%, driven by mounting supply concerns.

West Texas Intermediate (WTI) Oil price extends its losses for the second successive session, trading around $68.70 per barrel during the Asian hours on Friday. Crude Oil prices face challenges due to rising demand concerns, driven by the potential for United States (US) tariffs on the global economy.

Traders adopt caution on Friday after US President Donald Trump imposed higher tariff rates on US trading partners set to go into effect on August 1. On Thursday, Trump signed an executive order imposing tariffs ranging from 10% to 41% on US imports from dozens of countries and foreign locations, including Canada, India, and Taiwan, that failed to reach the trade deals deadline, per Reuters.

However, Oil prices are on track for a strong weekly gain of over 6%, marking the strongest performance since early June, driven by the supply concerns following Trump’s threat to impose 100% secondary tariffs on buyers of Russian crude. The United States also warned China, one of the largest Oil consumers, of heavy penalties if it continues purchasing Russian Oil.

The recent US data showed that inflation increased in June as tariffs supported prices for imported goods such as household furniture and recreation products. Core US Personal Consumption Expenditure Price Index (PCE) inflation ticked higher in June, rising 0.3% MoM as many market participants had expected. On an annualized basis, PCE inflation accelerated to 2.6% YoY, outrunning the expected hold at 2.5%.

The US PCE report suggests that price pressures would increase in the second half of the year and delay the US Federal Reserve (Fed) from cutting interest rates until at least October. It is important to note that higher interest rates would also impact Oil as the higher borrowing costs can limit economic growth in the United States, the world’s largest Oil consumer. Traders shift their focus toward the United States (US) Nonfarm Payrolls (NFP), due later in the day, which is expected to hold in positive territory.

WTI Oil FAQs

What is WTI Oil?

WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.

What factors drive the price of WTI Oil?

Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.

How does inventory data impact the price of WTI Oil

The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.

How does OPEC influence the price of WTI Oil?

OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.