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Oil prices fall as Trump's tariffs expand and cloud the demand outlook

Oil prices fell on Thursday, as market participants perceived that the latest tariff announcements made by U.S. president Donald Trump would threaten global economic growth.

Brent crude futures fell 22 cents or 0.31% to $69.97 per barrel at 0052 GMT. U.S. West Texas Intermediate Crude lost 27 cents or 0.39% to $68.11 per barrel.

After a public spat, Trump threatened to impose a 50% penalty on Brazil's exports to the U.S.

Trump had announced tariffs for copper, semiconductors, and pharmaceuticals. His administration also sent tariff letters to Iraq, the Philippines, and other countries. These letters were added to a dozen that his administration issued earlier this week, including to two of the most important U.S. suppliers, South Korea and Japan.

Minutes released by the Federal Reserve on Wednesday show that policymakers are still concerned about inflationary pressures caused by Trump's tariffs. Only "a few" officials said they thought interest rates could drop as early as this month.

High interest rates increase borrowing costs and decrease demand for oil.

The Energy Information Administration reported on Wednesday that the rise in crude oil stocks and declines in gasoline and distillate stockpiles last week helped support prices. The EIA reported that gasoline demand increased 6% last week to 9.2 millions barrels per day.

J.P. Morgan stated in a note to clients that global daily flights averaged 107,600 during the first eight days in July. Flights in China reached a five-month high. Port and freight activities indicated'sustained growth' in trade activity from last year.

The note stated that "year to date, the global oil demand has grown by an average of 0.97 million barrels a day, which is in line with our prediction of 1 million barrels a day." (Reporting and editing by Muralikumar Aantharaman in Tokyo)

(source: Reuters)