Oil prices slipped Tuesday as rising US-Canada trade tensions and expectations of tighter US monetary policy raised concerns over global economic growth and fuel demand, while the potential return of Yemeni crude exports added to supply-side pressure.
International benchmark Brent crude traded at $88.75 per barrel at 10 a.m. local time (0700 GMT), down 0.5% from the previous close of $89.22.
US benchmark West Texas Intermediate (WTI) traded at $82.31 per barrel, down around 0.2% from $82.48 in the previous session.
The US announced Monday that it would impose an additional 50% tariff on certain Canadian goods, describing the move as a response to what it called Canada's "discriminatory" treatment of American products.
A White House fact sheet said President Donald Trump had signed three proclamations imposing the tariffs to offset disadvantages faced by US businesses and create a more level playing field for American exports, including automobiles, alcohol and dairy products.
The White House said the tariffs would not apply to energy, potash, products already subject to Section 232 tariffs or certain other goods, including fish and critical minerals. The measures are set to take effect 30 days after they were signed.
The new tariffs heightened concerns that escalating trade tensions could slow economic activity and weaken global fuel demand, putting downward pressure on oil prices.
- Potential resumption of Yemen oil exports adds to supply concerns
Yemen's announcement that it plans to resume oil exports after a nearly four-year suspension also weighed on prices by raising expectations of additional crude supply.
Chairman of Yemen's Presidential Leadership Council Rashad al-Alimi announced Monday that the government was working to resume oil exports "by all available means" after shipments were suspended in 2022 amid conflict with the Houthi group.
He said export revenues would be used to support the state budget, pay public sector salaries, improve essential services and promote economic stability.
Tighter Fed policy expectations weigh on demand outlook
Expectations that the Fed could maintain a tighter monetary policy stance for longer also pressured oil prices.
Money markets are pricing in a 70% chance of a 25-basis-point rate hike in September and expect two additional rate increases over the next 12 months, raising concerns that higher borrowing costs could slow economic growth and weaken fuel demand.
- Middle East tensions limit losses
However, persistent geopolitical tensions in the Middle East continued to provide support for oil prices.
The US Central Command (CENTCOM) said Monday that it had carried out another round of strikes targeting Iranian military infrastructure.
"US forces struck Iranian military command centers, maritime capabilities, missile and drone launch sites, and air defense systems to degrade Iran's ability to continue attacking commercial vessels flowing through the Strait of Hormuz," CENTCOM said in a statement.
The command added that commercial vessel transits through the international maritime corridor were continuing.
Since early May, US forces had helped facilitate the transit of approximately 900 commercial vessels carrying about 450 million barrels of crude oil through the corridor, it said.
"American forces remain postured and prepared to hold Iran accountable for unwarranted aggression toward civilian mariners seeking to freely and openly transit the strait," it added.
By Duygu Alhan
Anadolu Agency
energy@aa.com.tr
