Week in Review — Crude Rallies Despite Trade Tensions and Record U.S. Output

Oil prices ended the week on a higher note, as tariffs dominated headlines and geopolitical uncertainty continued to shape sentiment. West Texas Intermediate (WTI) is sitting around $69 per barrel, while Brent is hovering at $71. Both benchmarks posted week-over-week gains, as WTI is up nearly 6% and Brent is up 4.4%, as investors weighed the potential fallout from sweeping new U.S. trade measures.

The biggest story this week was President Trump’s executive order imposing tariffs of 10% to 41% on imports from dozens of countries that failed to finalize trade agreements with the U.S. by the August 1 deadline. Canada, Brazil, India, and Taiwan were among those impacted, while others, including the European Union, South Korea, Japan, and the U.K., secured exemptions. These trade actions added fresh uncertainty to global oil flows and triggered volatility across commodities markets, particularly as attention now turns to ongoing U.S.-China negotiations.

President Trump also issued a warning to buyers of Russian crude, threatening 100% secondary sanctions if Russia fails to secure a ceasefire in Ukraine within 10 days. Such penalties could impact up to 2.75 Mbpd of Russian seaborne oil exports, primarily destined for India and China, which are two of the world’s top three crude consumers. While the market has yet to price in a full supply disruption, the potential for sanctions to choke key trade routes has added upward pressure to oil prices. At the same time, there are growing concerns that the broader tariff strategy could curb global economic growth and reduce oil demand. Recent U.S. inflation data already show signs of price pressures linked to trade policies.

On the supply side, U.S. crude oil production hit a new record in May, reaching 13.49 Mbpd, according to the Energy Information Administration (EIA). This increase from April’s record comes after the administration’s push to boost output, including expansion of drilling on federal lands. Offshore Gulf production also rose to 1.80 Mbpd, the highest since December, while Texas posted a slight increase to 5.752 Mbpd.

Despite the strong production figures, the refining sector is navigating its own set of challenges. U.S. refiners are processing the lightest crude slate on record due to a shortage of heavier grades, which yield more diesel. As a result, diesel crack spreads weakened throughout the week, suggesting potential softness in short-term distillate demand. In contrast, gasoline inventories fell by 2.7 million barrels, reinforcing expectations of solid consumption during the peak driving season.

Prices in Review

Crude prices opened the week at $65.15 on Monday and steadily climbed over the next several days. Tuesday saw a modest gain to $67.04, followed by a stronger uptick to $69.34 on Wednesday. Prices continued their upward momentum on Thursday, peaking at $70.30 before easing slightly to $69.35 on Friday. Overall, crude gained $4.20 for the week, a 6.45% increase from Monday’s open.

Diesel prices opened at $2.3965 on Monday and trended upward through midweek, reaching a high of $2.4580 on Wednesday. However, the gains were short-lived, with prices easing to $2.4240 on Thursday and settling at $2.3985 on Friday. Despite some volatility, diesel ended the week with a slight increase of $0.0020 or 0.08% from Monday’s open.

Gasoline prices opened at $2.0905 on Monday and saw consistent gains through Thursday, peaking at $2.2761. The sharpest increase came midweek, with prices jumping nearly 8 cents between Tuesday and Wednesday. However, prices retreated on Friday, falling to $2.1737. Overall, gasoline rose $0.0832 for the week, marking a 3.98% increase from Monday’s opening price.