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Oil price falls as trade war concerns increase worries about fuel demand

Oil prices declined on Tuesday as concerns the brewing trade war between major crude consumers the US and the EU will curb fuel demand growth by lowering economic activity weighed on investor sentiment. Brent crude futures fell 52c, or 0.75%, to $68.69 (R1,209) a barrel by 3.25 GMT. US West Texas Intermediate crude was at $66.69 (R1,174) a barrel, down 51c, or 0.76%. The benchmarks settled slightly lower on Monday. The August West Texas Intermediate contract expires on Tuesday and the more active September contract was down 54c, or 0.82%, to $65.41 (R1.151) a barrel. 'Broad demand concerns continue to simmer amid escalating global trade tensions, specially as markets eye the latest tariff threats between major economies and [US President Donald] Trump's potential announcements ahead of the August 1 deadline,' said Priyanka Sachdeva, senior market analyst at Phillip Nova. 'Investors are also eyeing the ripple effects of fresh US sanctions on Russian crude,' she said. Supply concerns have largely been alleviated by major producers raising output and since a ceasefire on June 24 ended the conflict between Israel and Iran. However, investors are increasingly worried about the global economy amid US trade policy changes. A weaker US dollar has provided some backing for crude as buyers using other currencies are paying relatively less. Prices have slipped 'as trade war concerns offset the support by a softer (US dollar)', IG market analyst Tony Sycamore wrote in a note. Sycamore also pointed to the possibility of an escalation in the trade dispute between the US and the EU over tariffs. The EU is exploring a broader set of possible countermeasures against the US as prospects for an acceptable trade agreement with Washington fade, according to EU diplomats. The US has threatened to impose a 30% tariff on EU imports on August 1 if a deal is not reached. There are also signs rising oil supply has entered the market as the Organization of the Petroleum Exporting Countries and their allies unwind output cuts. Saudi Arabia's crude oil exports in May rose to their highest in three months, data from the Joint Organizations Data Initiative showed on Monday.