A U.S. trade court on Thursday blocked the tariffs that President Trump has imposed on U.S. trade partners, saying the president overstepped his authority. The news pushed oil prices higher earlier today even as the market awaits bearish news from OPEC+.
“The court does not pass upon the wisdom or likely effectiveness of the President's use of tariffs as leverage,” the Court of International Trade’s three-member panel wrote in its ruling that imposes a permanent injunction on all the tariffs that Trump has announced since taking office.
“That use is impermissible not because it is unwise or ineffective, but because [federal law] does not allow it,” the judges said, as quoted by Reuters. They noted that Congress and not the president has exclusive authority over trade relations with other countries, and presidential emergency powers cannot override this authority.
Following the news, Brent crude and West Texas Intermediate rose by over 1%, with Brent trading at $65.68 per barrel at the time of writing, and WTI changing hands for $62.63 per barrel.
The court’s ruling has given traders a bit of a breather, analysts commented, and reason for a more optimistic outlook on oil demand—supported by data suggesting all the forecasts of a glut may have been premature.
Rystad Energy challenged the assumption of a glut, saying that market balance data actually suggested demand was stronger than supply growth. “From May through August, the data points to a constructive, bullish bias with liquids demand set to outpace supply,” analyst Mukesh Sahdev said, as quoted by Reuters. He expects demand to exceed supply growth by between 600,000 bpd and 700,000 bpd.
The bullishness was tempered by expectations of more OPEC+ supply coming in July while news of possible new U.S. sanctions on Russian oil failed to make an impression, as the flow of Russian oil so far has proved relatively resilient to any sanctions, as one Commonwealth Bank of Australia analyst commented.
By Irina Slav for Oilprice.com
