SINGAPORE: Oil prices dipped on Thursday after rising 3% the previous session, as investors are concerned that higher US tariffs would be restored, resulting in weaker fuel consumption, and major suppliers are likely to announce a production increase. Brent crude futures declined 45 cents, or 0.65%, to $68.66 a barrel at 8:45 a.m. Saudi time. US West Texas Intermediate crude fell 44 cents, or 0.66%, to $67.01 a barrel.
On Wednesday, both contracts reached their highest levels in a week as Iran suspended cooperation with the UN nuclear watchdog, raising concerns that the lingering dispute over the Middle East producer’s nuclear program could devolve into armed conflict, and the United States and Vietnam reached a preliminary trade agreement. Still, there is growing uncertainty around US trade policy, as the 90-day moratorium on the application of increased tariffs will expire on July 9 with no new trade agreements with key major trading partners, including the European Union and Japan.
Furthermore, the Organisation of Petroleum Exporting Countries (OPEC) and its allies, including Russia, known as OPEC+, are expected to agree to increase output by 411,000 barrels per day (bpd) at their weekend meeting. Given the uncertainty surrounding these incidents, as well as the forthcoming July Fourth Independence Day holiday in the United States, “market participants will probably not want to carry too much risk into the long US weekend,” ING analysts said in a note on Thursday.
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