Oil Updates — prices rebound on Trump threats on Russian crude buyers

Arab News

6 days ago

SINGAPORE: Oil prices climbed on Wednesday, rebounding from a five-week low in the previous day, on concerns of supply disruptions after US President Donald Trump's threats of tariffs on India over its Russian crude purchases.
Brent crude futures gained 48 cents, or 0.7 percent, to $68.12 a barrel by 9:45 a.m. Saudi time, while US West Texas Intermediate crude was up 43 cents, or 0.7 percent, at $65.59 a barrel.
'There's still plenty of uncertainty over the US imposing secondary tariffs on buyers of Russian oil ... market chatter is growing that China's purchases of Russian oil may come into focus next,' ING commodity strategists said on Thursday.
'If India were to stop buying Russian oil amid tariff threats, we believe the market would be able to cope with the loss of this supply,' they said, adding that the bigger risk was if other buyers also started to shun Russian oil.
Both oil contracts fell by more than $1 on Tuesday to settle at their lowest in five weeks, marking a fourth session of losses, on oversupply concerns from OPEC+'s planned September output hike.
'Investors are assessing whether India will reduce its Russian crude purchases in response to Trump's threats, which could tighten supply, but it remains to be seen if that will actually happen,' said Yuki Takashima, economist at Nomura Securities.
'If India's imports remain steady, WTI is likely to stay within the $60-$70 range for the rest of the month,' he said. The Organization of the Petroleum Exporting Countries and its allies, together known as OPEC+, agreed on Sunday to raise oil production by 547,000 barrels per day for September, a move that will end its most recent output cut earlier than planned.
OPEC+ pumps about half of the world's oil and had been curtailing production for several years to support the market, but the group introduced a series of accelerated output hikes this year to regain market share.
At the same time, US demands for India to stop buying Russian oil as Washington seeks ways to push Moscow for a peace deal with Ukraine could upset supply flows as Indian refiners seek alternatives and Russian crude is redirected to other buyers.
Trump on Tuesday again threatened higher tariffs on Indian goods over the country's Russian oil purchases over the next 24 hours. Trump also said declining energy prices could pressure Russian President Vladimir Putin to halt the war in Ukraine.
New Delhi called Trump's threat 'unjustified' and vowed to protect its economic interests, deepening a trade rift between the two countries.
Nomura's Takashima also pointed to industry data showing crude inventories in the US, the world's biggest oil consumer, as supportive for the oil market.
US crude inventories fell by 4.2 million barrels last week, sources citing American Petroleum Institute figures said on Tuesday. That compares with a Reuters poll estimate of a 600,000 barrels draw for the week to August 1.
The US Energy Information Administration is due to release its weekly inventory data on Wednesday.