Oil prices fall on demand concerns in volatile session as US court blocks Trump tariffs

Oil prices fell on Thursday, retreating from earlier gains, after the International Energy Agency's director warned of weaker demand in China, while the market also watched for potential new U.S. sanctions curbing Russian crude flows and an OPEC+ decision on hiking output in July.

Prices had earlier risen after a U.S. court on Wednesday ruled that President Donald Trump overstepped his authority by imposing across-the-board duties on imports from U.S. trading partners. The court was not asked to address some industry-specific tariffs Trump has issued on automobiles, steel and aluminium using a different statute.

The ruling buoyed risk appetite across global markets, which have been on edge over the impact of the levies on economic growth, but some analysts said the relief may only be temporary given the Trump administration has said it will appeal.

Brent crude futures dropped 60 cents, or 0.9%, to $64.30 a barrel at 12:12 p.m. EDT (1612 GMT). U.S. West Texas Intermediate crude fell 67 cents, or 1.1%, to $61.17 a barrel.

Futures fell after IEA Executive Director Fatih Birol said in an interview with Bloomberg that demand for oil was considerably weak on China and developments in Russia and Iran were "question marks" for oil prices.

The U.S. and Iran are holding talks meant to rein in Iranian nuclear activities that have rapidly accelerated since Trump pulled Washington out of a 2015 deal between Iran and major powers that strictly limited those activities.

"We’ve seen a lot of back and forth concerns about the Iran situation, whether we’re getting closer to a conflict or a peace deal," said Phil Flynn, senior analyst with Price Futures Group. "We’re moving technically and emotionally right now in a lot of these markets."

On the oil supply front, the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, could agree on Saturday to accelerate oil production hikes in July.

"We're assuming the group will agree on another large supply increase of 411,000 barrels per day. We expect similar increases through until the end of the third quarter, as the group increases its focus on defending market share," ING analysts said in a note.