September WTI crude oil (CLU25) on Friday closed down -1.93 (-2.79%), and September RBOB gasoline (RBU25) closed down -0.0553 (-2.54%).
Crude oil and gasoline prices sold off sharply on Friday, driven by concerns about global energy demand due to President Trump’s tariff policies and weaker-than-expected US economic reports on July payrolls and July ISM manufacturing. Also, Friday’s slump in the S&P 500 to a 2-week low curbs confidence in the economic outlook, which is negative for energy demand.
Crude prices came under pressure Friday after President Trump late Thursday announced a 10% global minimum and 15% or higher tariffs for countries with trade surpluses with the US, effective after midnight on August 7. The higher tariffs could weigh on global economic growth and energy demand.
Friday’s US economic news was weaker than expected and bearish for energy demand and crude prices. Jul nonfarm payrolls rose +73,000, weaker than expectations of +104,000, and Jun nonfarm payrolls were revised downward to +14,000 from the previously reported +147,000. Also, the Jul ISM manufacturing index unexpectedly fell -1.0 to 48.0, weaker than expectations of an increase to 49.5 and the steepest pace of contraction in 9 months.
Crude prices have support after President Trump said on Monday that he would impose a new deadline of 10 days for Russia to reach a truce with Ukraine before he increases sanctions on Russian energy exports. JPMorgan Chase warned that if enforced, oil markets would be unable to ignore the impact of triple-digit tariffs on Russian oil, given the significant scale of Russian exports and limited OPEC spare capacity, which could potentially lead to a supply shock.
The European Union recently approved fresh sanctions on Russian oil due to its aggression against Ukraine. The sanctions package includes cutting off 20 more Russian banks from the international payments system SWIFT, as well as restrictions imposed on Russian petroleum refined in other countries. A large oil refinery in India, part-owned by Russia’s Rosneft PJSC, was also blacklisted. Additionally, 105 more ships in Russia’s shadow fleet were sanctioned, pushing the number of sanctioned ships above 400.