Oil prices dropped sharply on Thursday, with Brent settling at $68.64 per barrel (down $1.55 or 2.21%) and West Texas Intermediate closing at $66.57 (down $1.81 or 2.65%), as investors assessed the potential fallout from U.S. President Donald Trump’s escalating global tariff threats.
The market reacted to new tariff warnings, including a proposed 50% duty on Brazilian exports, following political tensions between Trump and Brazil’s President Lula over the trial of former President Jair Bolsonaro. Lula hinted at retaliatory action and convened a ministerial meeting on Thursday.
The Trump administration also announced plans to impose tariffs on copper, semiconductors, and pharmaceuticals, while sending formal notices to additional trade partners including the Philippines, Iraq, South Korea, and Japan. Although the oil market has grown somewhat desensitized to Trump’s tariff threats due to previous reversals, traders remain cautious.
Minutes from the Federal Reserve’s June 17–18 meeting showed few policymakers ready to support a rate cut this month. Ongoing concern about inflation tied to tariffs and trade uncertainty has dampened prospects for near-term monetary easing. Higher interest rates could curb oil demand by slowing economic growth.
OPEC+ is on track to implement another supply increase in September, part of a phased rollback of voluntary cuts. However, the group may pause further hikes in October amid signs of plateauing global demand. While some analysts warn that peak oil fears have faded, others note that current price levels are still encouraging investment in new production sources.
In geopolitical news, U.S. Secretary of State Marco Rubio held talks with Russia’s Sergei Lavrov, pressing for movement on Ukraine but signaling little immediate progress.