Brent crude fell more than $4 a barrel in August after a three-month rally

Brent crude fell more than $4 a barrel in August, breaking a three-month upward trend on concerns about U.S. President Donald Trump's imposition of additional tariffs on India and expectations that demand will weaken as the summer travel season ends in the United States.

The outlook for global energy demand strengthened after Trump extended the deadline for bilateral tariffs with the European Union. This development led Brent crude to close at $62.60 in May, a 2.6% increase from the previous month.

Trump's announcement in June that a trade deal had been reached with China increased demand from the world's two largest oil consumers and importers, putting upward pressure on prices. Brent crude ended the month up 6.2% at $66.46.

Expectations that optimism surrounding global trade agreements would stimulate economic activity and positively impact oil demand supported the rise in prices in July. The Washington administration's announcement of new sanctions over oil shipments from Iran and Russia fueled concerns about a supply shortage, leading Brent crude to close July with a 7.9% increase at $71.71.

However, the US's 50% tariff hike on goods from India and expectations that demand would weaken with the end of the US summer travel season reversed the three-month upward trend in August.

Brent crude closed August at $67.37, a 6% decline. This puts the price of a barrel at around $4.34 lower than in July.

“Prices may weaken in the last months of the year.”

Kate Dourian, a visiting scholar at the Washington Arab Gulf States Institute, told Anadolu Agency (AA) that the expectation of excess supply is putting downward pressure on oil prices as the final quarter of the year approaches.

Dourian noted that prices have remained relatively stable despite production increases by the OPEC+ group of oil producers. He added, "If excess supply develops in the final months of the year, prices could weaken. However, whether demand is strong enough to keep the market balanced in the coming months will determine prices."

Dourian pointed out that market balances could change if sanctions against Iran are reinstated or Washington imposes harsher sanctions on Russia's energy sector, adding that geopolitical and commercial uncertainties, which have increased price volatility throughout the year, continue to have an impact.

“There is a high probability that prices will decline towards $50.”

Osama Rizvi, Energy and Economic Analyst at the international data company Primary Vision Network, also stated that there may be a supply surplus not only in the crude oil market but also on the product side in the coming months.

Rizvi pointed out that global refinery activities are at very high levels and noted:

However, if this isn't met by sufficient demand, which is quite possible, it will lead to increased stockpiles. Increased diesel demand from electricity generation in Europe could provide some support to prices. However, China's appetite for stockpiles will be the primary determinant. I expect prices to remain within a narrow range going forward, with a decline towards $50 rather than $70 more likely.

AA