Oil Markets Weaken Following US–China Extension of Tariff Suspension

Oil prices edged lower on Tuesday, August 12, after the United States and China agreed to extend a freeze on planned tariff increases, while U.S. inflation data for July showed a modest rise.

At the close, Brent crude fell 51 cents, or 0.77%, to $66.12 per barrel, while West Texas Intermediate (WTI) dropped 79 cents, or 1.24%, to $63.17 per barrel.

US–China extend tariff suspension
President Donald Trump announced an extension of the pause on tariff hikes for Chinese goods until November 10, delaying the implementation of triple-digit tariffs to give U.S. retailers breathing room ahead of the crucial holiday shopping season.

The move fueled hopes that the world’s two largest economies could reach a broader agreement and avoid what analysts have called a “de facto trade embargo.” Tariffs have been seen as a potential drag on global growth, dampening fuel demand and pressuring oil prices.

Inflation and geopolitical tensions add pressure
The latest data showed the U.S. Consumer Price Index (CPI) rose in July 2025 as higher import costs pushed core inflation to its fastest pace in six months.

Oil markets also faced headwinds from geopolitical developments. President Trump is scheduled to meet Russian President Vladimir Putin in Alaska on August 15 to discuss ending the war in Ukraine.

Washington has increased pressure on Moscow, setting an August 8 deadline for Russia to agree to peace terms or face secondary sanctions targeting countries that purchase Russian oil. Trump has also urged India and China to reduce crude imports from Russia.

OPEC revises oil demand outlook
In its monthly report released Tuesday, the Organization of the Petroleum Exporting Countries (OPEC) raised its 2026 global oil demand growth forecast by 100,000 barrels per day to an increase of 1.38 million bpd. The 2025 forecast remained unchanged, while projections for supply growth from the U.S. and other non-OPEC+ producers were trimmed, signaling a potentially tighter market ahead.