Oil prices rise due to the blocking of Trump’s tariffs and expectations of new sanctions against Russia
29 May 10:19
Oil prices rose after a US court blocked most of US President Donald Trump’s tariffs. Other market factors include possible new US sanctions against Russian oil and OPEC’s decision to increase production in July, "Komersant Ukrainian" reports citing Reuters.
According to OilPrice.com, futures for Brent crude oil rose by $1.03, or 1.59%, to $65.93 per barrel. US West Texas Intermediate rose by $1.05, or 1.7%, to $62.89 per barrel as of 08:44 Kyiv time.
Tariffs are canceled. Or not?
The U.S. Court of Trade on Wednesday ruled that Trump exceeded his authority by imposing general tariffs on imports from U.S. trading partners. The court did not address some of the sectoral tariffs that Trump imposed on automobiles, steel, and aluminum using a different statute.
The court’s decision increased risk appetite in global markets, which had been concerned about the impact of the tariffs on economic growth, but analysts noted that the relief could be only temporary, as the Trump administration has indicated its intention to appeal.
“But for now, investors are getting a respite from the economic uncertainty they dislike so much,”
– said Matt Simpson, an analyst at City Index in Brisbane.
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Other factors
On the supply side, the market is concerned about potential new sanctions against Russian oil. At the same time, the Organization of the Petroleum Exporting Countries and allies, collectively known as OPEC, may agree on Saturday to accelerate oil production increases in July.
“We assume that the group will agree to another significant supply increase of 411 thousand barrels per day. We expect similar increases by the end of the third quarter as the group steps up efforts to defend its market share,”
– iNG analysts said.
In addition, Chevron has suspended oil production and a number of other activities in Venezuela after the Trump administration revoked its key license in March.
In April, Venezuela canceled shipments to Chevron, citing payment uncertainty related to U.S. sanctions. Chevron exported 290,000 barrels per day of Venezuelan oil, or more than a third of the country’s total.
According to market sources, U.S. oil and gasoline stocks declined last week, while distillate stocks increased.
Meanwhile, a wildfire in the Canadian province of Alberta has led to a temporary suspension of some oil and gas production, which could reduce supplies, and forced residents of a small town to evacuate.
Forecast
“From May to August, the data points to a constructive bullishness as demand for petroleum products should exceed supply,”
– said Mukesh Sahdev, global head of commodity markets at Rystad Energy. He expects demand growth to exceed supply growth by 600-700 thousand barrels per day.
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