Oil prices climbed by about 1 percent on Thursday, breaking a five-day losing streak, as indicators pointed to stable demand in the United States, the world’s top oil consumer. However, broader gains were capped by lingering concerns over the economic fallout from U.S. tariff measures.
As of 4:02 GMT, Brent crude futures gained 66 cents, or 0.99 percent, to $67.55 a barrel, while U.S. West Texas Intermediate crude rose 71 cents, or 1.1 percent, to $65.05 a barrel.
Both benchmarks fell about 1 percent to their lowest in eight weeks on Wednesday following U.S. President Donald Trump’s remarks about progress in talks with Moscow.
Strong U.S. oil demand supports market recovery
A White House official said on Wednesday that Trump could potentially meet with Russian President Vladimir Putin as early as next week. Despite this, the U.S. is still moving forward with plans to impose secondary sanctions—including possible measures targeting China—to increase pressure on Moscow to end the war in Ukraine. Russia remains the world’s second-largest crude oil producer, trailing only the U.S.
Meanwhile, oil prices found support from a larger-than-expected drop in U.S. crude inventories. According to the Energy Information Administration, U.S. crude stockpiles declined by 3 million barrels to 423.7 million in the week ending August 1, significantly exceeding analysts’ forecast of a 591,000-barrel draw.
U.S. crude inventories declined as exports rose and refinery activity increased, with utilization rates on the Gulf Coast—the nation’s largest refining hub—and the West Coast reaching their highest levels since 2023.
According to JP Morgan analysts, global oil demand averaged 104.7 million barrels per day through August 5, reflecting annual growth of 300,000 barrels per day. However, this figure remains 90,000 barrels per day below the bank’s forecast for the month.
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Tariffs on India limit further gains in oil prices
Nevertheless, broader global macroeconomic uncertainty, particularly following the U.S.’s latest tariff measures on Indian imports, limited further gains in oil prices. On Wednesday, President Trump imposed an additional 25 percent tariff on goods from India, citing its ongoing imports of Russian oil. The new tariff is set to take effect 21 days after August 7.
Trump also indicated that similar duties could soon be imposed on China, echoing the recent 25 percent tariff on India, due to Beijing’s continued purchases of Russian crude.
Although the newly announced U.S. tariffs on Indian goods are not scheduled to take effect for another three weeks, markets are already factoring in the anticipated downstream consequences. These include potential disruptions to global trade flows, reduced demand from emerging markets, and shifts in the broader landscape of energy diplomacy, said analysts.
Analysts also warned that tariffs are likely to negatively impact the global economy, ultimately dampening fuel demand. They added that markets may be underestimating the broader consequences that these measures could have on the U.S. economy and inflation.
