Oil prices declined Thursday as investors remained cautious ahead of U.S. President Donald Trump’s August 1 tariff deadline, which threatens countries that have yet to secure a trade deal with the U.S. Brent crude for September delivery, which expired Thursday, settled down 71 cents (0.97%) at $72.53 per barrel. U.S. West Texas Intermediate (WTI) crude fell 74 cents (1.06%) to close at $69.26, after dropping more than $1 earlier in the session. The pullback followed a 1% gain in both benchmarks the previous day.
The White House stated that countries lacking a finalized trade agreement or formal tariff notice would be contacted by the end of the day. The U.S. has reached deals with two-thirds of its top 18 trading partners.
Trump announced an agreement with Mexican President Claudia Sheinbaum to extend the existing trade deal by 90 days, allowing further negotiations. During this extension, Mexico will maintain tariffs of 25% on fentanyl and cars, and 50% on steel, aluminum, and copper, while agreeing to eliminate non-tariff barriers.
Analysts noted the uncertainty surrounding trade, especially with Mexico, contributed to downward pressure on oil prices. “The tariffs are negative for demand, and Mexico’s situation just delays the resolution,” said John Kilduff of Again Capital.
U.S. inflation rose in June, driven by tariff-inflated import costs, adding pressure to delay Federal Reserve interest rate cuts until at least October. Lower rates typically support oil demand.
Meanwhile, U.S. crude production hit a record 13.49 million barrels per day in May, up 24,000 bpd from April, according to the EIA.
In inventory data, U.S. crude stocks unexpectedly rose by 7.7 million barrels to 426.7 million, while gasoline inventories fell 2.7 million barrels to 228.4 million, far exceeding forecasts for a 600,000-barrel draw. Analysts noted the build in crude was offset by strong gasoline demand, making the data mostly neutral for prices.
Geopolitical tensions continued to lend support, as Trump reiterated his threat to impose 100% secondary tariffs on nations trading with Russia unless progress is made within 10–12 days. India appears to be scaling back Russian crude purchases, while China faces warnings of “huge tariffs” if it continues buying.
Separately, the U.S. Treasury announced sanctions on over 115 Iran-linked entities and vessels following strikes on Iranian nuclear facilities in June.