Oil prices edged lower on Tuesday as traders evaluated fresh U.S. tariff threats and a larger-than-expected production increase by OPEC+. Brent crude slipped about 0.4% to $69.30 a barrel, while West Texas Intermediate traded at $67.55 (-0.6%).
President Trump warned that steep new tariffs on trade partners including Japan and South Korea could start August 1, though he left room for negotiation. The uncertainty has fueled concerns over global growth and future oil demand.
Meanwhile, OPEC+ announced plans to raise production by 548,000 barrels per day in August, outpacing recent monthly increases. The group, which has been unwinding voluntary cuts since 2023, is expected to approve another 550,000 bpd boost for September, fully removing earlier curbs.
Although rising output risks oversupply later in the year, seasonal demand and tighter diesel markets are offering some support. U.S. distillate inventories are at their lowest seasonal levels since 1996, and European diesel futures point to further tightness. Ongoing Houthi attacks on vessels in the Red Sea are also raising shipping costs, though analysts say impacts remain limited unless disruptions escalate significantly.
Investors remain cautiously optimistic heading into peak summer demand in the U.S., with data showing money managers recently increased bullish positions in crude futures. However, HSBC analysts warned that as demand eases after summer, the added OPEC+ exports could weigh more heavily on prices.