FX.co ★ Oil Falls on Tariff Worry, Rising Supply

West Texas Intermediate (WTI) crude oil futures declined to approximately $67.5 per barrel on Tuesday, dropping back from a recent two-week peak. This movement can be attributed to investor anxiety over the impact of US-imposed tariffs combined with an increase in OPEC+ oil production. On Monday, President Trump introduced the first of several anticipated letters that propose elevated tariff rates on significant trading partners, although he hinted at possible negotiations and postponed the implementation of these tariffs until at least August 1. Noteworthy among these communications were letters to Japan and South Korea, specifying a 25% tariff on imports from these nations. Compounding the downward pressure on oil prices, OPEC+ announced on Sunday an augmentation of output by 548,000 barrels per day (bpd) in August—marking the fourth consecutive monthly increase and exceeding analysts' expectations. This action aims to recuperate nearly 80% of the voluntary 2.2 million bpd reductions previously enacted by eight OPEC member countries. Nonetheless, some of the price drop was mitigated by escalating geopolitical tensions. A second offensive by Yemen's Houthi rebels on vessels in the Red Sea heightened apprehensions about potential disturbances along critical maritime corridors.