Week in Review – Prices Rise on Trade Momentum, But Supply Uncertainty Persists

Oil prices increased slightly compared to last week’s numbers as markets weighed promising trade negotiations against evolving geopolitical dynamics and shifting crude supply chains. WTI crude increased over 40 cents to $66 per barrel, accounting for a nearly $2 week-over-week increase.

Bullish sentiment took hold this week after a potential U.S.-EU trade agreement was announced that could introduce a 15% baseline tariff with possible exemptions, an encouraging sign for global trade relations. This trade optimism helped offset concerns about a possible increase in Venezuelan crude exports, as the U.S. considers granting limited licenses to resume operations. If approved, the move could add over 200,000 bpd of Venezuelan oil back into the global market, easing tightness in the heavy crude segment.

Tight supply of heavy crude was particularly evident along the U.S. Gulf Coast, where refiners scrambled to offset declining imports from Venezuela and Mexico. Mexican Maya crude, a preferred heavy grade, saw record-low imports in July due to declining output and quality issues. Meanwhile, U.S. sanctions continue to restrict Venezuelan flows. In response, refiners boosted imports from alternative suppliers such as Colombia, Brazil, and Guyana, all of which reached their highest levels in over five years. Imports from the Middle East also reached the highest since January.

The transition has not been seamless. Most U.S. crude production is light and low-sulfur, while Gulf Coast refiners are optimized for heavier, sour grades. This mismatch has posed operational challenges and threatened refining margins. A return of Venezuelan barrels through authorized oil swaps could restore needed balance and improve refinery economics.

On the geopolitical front, President Donald Trump resurfaced tariff tensions with a threat to impose 100% tariffs on countries that continue to buy Russian oil unless Moscow agrees to a peace deal with Ukraine within 50 days. Similar threats targeting buyers of Venezuelan crude earlier this year were never enforced.

So far, markets have reacted with measured calm. Oil prices remained in the mid-$60s range, with markets viewing the tariff rhetoric as unlikely to materialize. With China and India continuing their Russian and Venezuelan oil imports, it appears that real-world demand and supply relationships remain largely unaffected by the political noise.

On the inventory front, the EIA reported that total motor gasoline inventories fell by 1.7 million barrels but remain slightly above the five-year average. Meanwhile, distillate inventories, which include diesel, rose by 2.9 million barrels but are still about 19% below seasonal norms. Even with this week’s improvement in diesel supply, the underlying story remains unchanged. Markets will need refinery utilization to hold in the mid-90% range this summer to help rebuild inventories, though any unplanned outages could quickly disrupt supply.

Prices in Review

Crude prices opened the week at $67.32 and trended lower throughout the week. After a slight dip to $67.12 on Tuesday, prices declined more sharply to $65.49 on Wednesday and held near that level at $65.42 on Thursday. On Friday, prices edged up slightly to $66.15 but remained well below Monday’s opening level. Overall, crude fell $1.17 for the week, marking a 1.74% decrease.

Diesel prices opened at $2.4569 on Monday and fluctuated throughout the week. Prices rose to a weekly high of $2.4965 on Tuesday before slipping to $2.4477 on Wednesday. Thursday saw a slight uptick to $2.4528, but prices fell again on Friday, closing the week at $2.4080. Overall, diesel declined by 4.89 cents, or 1.99%, from Monday’s opening level.

Gasoline prices opened at $2.1455 on Monday and trended downward through most of the week. Prices dipped to $2.1281 on Tuesday and continued to slide to $2.1042 on Wednesday. A slight increase was seen on Thursday at $2.1199 before slipping again to $2.1091 on Friday. Overall, gasoline fell 3.64 cents for the week, representing a 1.70% decrease from Monday’s opening level.