Oil retreated from its surge over West Asia tensions as traders weigh the latest developments in the region against a risk-off mood triggered by renewed tariff threats from Washington. At the same time, the dollar fell to the weakest level in three years amid worries over the outlook for the US economy.The Bloomberg Dollar Spot Index slid as much as 0.8% on Thursday to the lowest level since April 2022. The euro jumped to the strongest since 2021, while the British pound advanced to a new three-year high. So far in 2025, the dollar is down more than 8% as investors build up bets that US President Donald Trump’s trade and tax policies will weigh on the economy. The concern remains that the US could experience a spike in inflation and start sliding toward a recession amid Trump’s sweeping tariffs on imports. This has investors poring over incoming economic data, especially on the labour market, to determine the path of rates in the US. Brent slipped near $69 a barrel after jumping 4.3% on Wednesday, the most since Oct, with signs the rally was overstretched. Crude shot up after Iran threatened to strike US bases if nuclear talks fell through and the US told some staff to depart the embassy in Iraq. The UK Navy issued a warning to ships sailing across the Strait of Hormuz, through which over a quarter of the world’s oil travels. On the trade front, Trump said he intended to send letters to trading partners in the next one to two weeks setting unilateral tariff rates, ahead of a July 9 deadline to reimpose higher duties on dozens of economies. That blunted appetite for risk assets.
