Crude oil prices rise above $71.8 amid new tariffs impacting Russian supply
Brent crude futures increased by 4 cents, or 0.06 percent, reaching $71.74 a barrel by 12:01 GMT (currently trading above $71.8). Meanwhile, U.S. West Texas Intermediate crude rose by 1 cent, or 0.01 percent, to $69.27 (currently trading above $69.34).
Despite this, Brent prices are set to achieve a weekly gain of 4.9 percent, while WTI is expected to rise by 6.4 percent after U.S. President Donald Trump earlier this week threatened to impose tariffs on buyers of Russian crude, particularly targeting China and India, in an effort to persuade Russia to cease its aggression against Ukraine.
On Friday, however, investors were primarily focused on Trump's announcement of new, predominantly higher, tariff rates on U.S. trading partners, which are scheduled to take effect on August 1. Trump signed an executive order on Thursday imposing tariffs ranging from 10 percent to 41 percent on U.S. imports from numerous countries and territories, including Canada, India, and Taiwan, that failed to secure trade agreements by his August 1 deadline.
Some analysts have cautioned that these levies will restrain economic growth by increasing prices, which could negatively impact oil consumption. On Thursday, indications emerged that existing tariffs are already exerting upward pressure on prices in the U.S., the world's largest economy and oil consumer.
Read more: Oil prices fall to $73.08 as Trump's tariff threats mount, U.S. inventories rise
Rising U.S. inflation and tariffs
U.S. inflation rose in June as tariffs elevated costs for imported goods, such as household furniture and recreational products. This trend supports the notion that price pressures will intensify in the latter half of the year, potentially delaying
the U.S. Federal Reserve
's decision to lower interest rates until at least October.
Sustaining interest rates would also influence oil, as higher borrowing costs can restrict economic growth. Concurrently, Trump's threats to enforce 100 percent secondary tariffs on Russian crude buyers have buoyed prices due to worries that this could disrupt oil trade flows, removing some oil from the market.
JP Morgan analysts noted in a report on Thursday that Trump's warnings to China and India regarding penalties for their ongoing purchases of Russian oil could jeopardize 2.75 million barrels per day of Russian seaborne oil exports. The two nations rank as the world's second- and third-largest crude consumers, respectively.
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