New York, August 7, 2025 – Oil prices surged about 1% on Wednesday, with Brent crude futures reaching $67.56 per barrel, as President Donald Trump’s new tariff announcements and a weaker U.S. dollar stirred energy markets. The price hike comes amid concerns over trade disruptions and geopolitical tensions, impacting American consumers and industries reliant on affordable energy.

Tariff Announcements Shake Energy Markets

President Trump’s aggressive trade policies, including a proposed 100% tariff on foreign semiconductors and targeted duties on goods from nations like India and China for trading with Russia, have jolted oil markets. Brent crude rose 68 cents, or 1%, to $67.56 per barrel, while U.S. West Texas Intermediate (WTI) crude gained 66 cents, or 1%, settling at $64.54 per barrel. These tariffs, particularly the 25% duty on Indian goods effective August 1, 2025, could disrupt up to 2.3 million barrels per day of Russian oil imports to India, tightening global supply and pushing prices higher, according to JP Morgan.

The tariffs have sparked fears of a broader trade war, which could dampen U.S. economic growth and reduce oil demand. Analysts at Rystad Energy warn that a prolonged trade conflict might slash Chinese oil demand growth, a key driver of global consumption. However, exemptions for companies investing in U.S. manufacturing, such as chipmakers TSMC and Samsung, signal Trump’s push to bolster domestic industry, potentially stabilizing energy-intensive sectors.

Dollar Drop and U.S. Inventory Trends

A declining U.S. dollar, down 0.2% on Wednesday per the U.S. Dollar Index, supported oil price gains by making crude more affordable for foreign buyers. U.S. Energy Information Administration (EIA) data showed a surprising 7.7 million-barrel build in crude inventories for the week ending July 25, 2025, against expectations of a 1.3 million-barrel draw. However, gasoline stocks dropped by 2.7 million barrels, reflecting strong demand during the U.S. summer driving season, which provided a bullish signal for refiners and fuel retailers.

Geopolitical Risks Add Pressure

Geopolitical developments, including Houthi attacks on Red Sea shipping, have raised concerns about oil supply routes. Recent assaults, such as a drone and speedboat attack on a Liberian-flagged vessel, have forced rerouting, increasing shipping costs for U.S. importers of oil and liquefied natural gas. Tensions in the Middle East, particularly involving Iran, could further spike prices, with Capital Economics estimating Brent could hit $80-$100 per barrel if Iran’s oil infrastructure is disrupted. Such a scenario would hit U.S. consumers hard, raising costs at the pump.

U.S. Production and Policy Challenges

The EIA revised its 2025 U.S. oil production forecast downward, citing lower prices curbing drilling activity. This aligns with statements from U.S. producers like Diamondback, which suggested domestic onshore oil output may have peaked. Trump’s “Drill, baby, drill” policy faces hurdles, as tariffs on Canadian and Mexican crude could raise costs for U.S. refineries, particularly those processing heavier grades. This could lead to higher gasoline and diesel prices, impacting American drivers and businesses.

Federal Reserve Chair Jerome Powell has cautioned that tariffs could fuel inflation, potentially forcing interest rate hikes that would slow economic growth and oil demand. A 90-day tariff truce with China and a trade deal with Japan offer some relief, but the August 1 deadline for other trade partners, including Canada and Mexico, looms large. Two-thirds of the U.S.’s top trade partners have secured deals, but unresolved agreements could exacerbate energy market volatility.

Impact on American Consumers and Industry

For U.S. consumers, lower oil prices earlier in 2025 have kept gasoline prices manageable, but tariff-related supply chain disruptions threaten to reverse these gains. Higher crude import costs from Canada and Mexico could squeeze refining margins, leading to pricier fuel and heating costs as winter approaches. U.S. industries, from manufacturing to logistics, face increased operational costs if energy prices rise further.

The oil industry itself is under pressure. With Brent prices hovering near $67, some U.S. shale producers are finding current levels unprofitable, potentially leading to reduced output. Meanwhile, OPEC+ plans to boost production by 548,000 barrels per day in August, which could cap price gains unless geopolitical or trade disruptions intensify.

Market Outlook and Investor Sentiment

Investor sentiment remains cautious, with platforms like Stocktwits showing “extremely bearish” views on the United States Oil Fund (USO). Goldman Sachs lowered its December 2025 Brent price forecast to $66 per barrel, citing recession risks and potential OPEC+ supply increases. HSBC also cut its 2025 global oil demand growth estimate to 0.9 million barrels per day, reflecting trade-related uncertainties.

Despite Wednesday’s 1% gain, Brent is down 1.23% over the past month and 12.26% lower than last year, signaling persistent market challenges. Technical support at $70 per barrel offers hope for a rebound, but downside risks remain if trade tensions escalate.

Looking Ahead

The 1% oil price increase on August 6, 2025, underscores the complex interplay of Trump’s tariff policies, geopolitical risks, and U.S. market dynamics. While strong gasoline demand and a weaker dollar provide near-term support, the threat of trade wars and supply chain disruptions looms large. American consumers and businesses should brace for potential price volatility at the pump and beyond, as global energy markets navigate an uncertain path.

Sources: Reuters (web:5, web:17, web:18, web:19, web:20, web:21, web:22), NPR (web:15), CNBC (web:6), Economic Times (web:10), Trading Economics (web:7), BBC (web:24)