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Oil prices rise as tariff concerns and Russian supply threats compete for attention

The oil prices remained unchanged on Friday, after dropping more than 1% the previous session. Traders were digesting the impact of the new U.S. higher tariffs which may curb economic activity and reduce global fuel demand growth.

Brent crude futures were up 4 cents or 0.06% to $71.74 per barrel at 1201 GMT. U.S. West Texas Intermediate Crude rose by 1 cent or 0.01% to $69.27.

Brent prices will still rise by 4.9% this week, while WTI prices will climb by 6.4%. This is after U.S. president Donald Trump threatened earlier in the week to impose tariffs on Russian crude buyers, particularly China, India and South Korea, to get them to stop their war against Ukraine.

Investors were focused more on Trump's new tariffs, which are largely higher, that will be imposed on U.S. trade partners on August 1.

Trump signed an Executive Order on Thursday that imposed tariffs of 10% to 41% for U.S. imports coming from Canada, India, and Taiwan. These countries failed to meet his August deadline to conclude trade agreements.

Analysts have warned that the new levies could limit economic growth because they will increase prices and reduce oil consumption.

There were signs on Thursday that the existing tariffs in the U.S. are already pushing prices up. The U.S. is the largest economy and the biggest oil consumer.

Inflation in the United States increased in June, as tariffs increased prices of imported goods like household furniture and recreational products. The data supports the view that the price pressures will increase in the second half and the Federal Reserve won't cut interest rates until October.

The higher borrowing costs could also limit economic growth.

Trump's threat to impose secondary tariffs of 100% on Russian crude buyers has supported the price because there was concern that this would disrupt oil trade and remove some oil off the market.

In a note published on Thursday, JP Morgan analysts stated that Trump's warnings of sanctions against China and India for their continued purchases of Russian crude oil could put 2,75 million barrels of Russian oil exported by sea at risk. Both countries are among the top three crude oil consumers in the world.

Analysts said that the Trump administration will find it impossible to sanction the second largest oil exporter in the world without driving up oil prices.

(source: Reuters)