Latest news with #oilmarket
Yahoo
2 hours ago
- Business
- Yahoo
Will Trump Follow Up on Threats to Stifle Russia's Oil Exports?
While watching summer demand and OPEC+ production policy, the oil market has started to pay attention to President Trump's threats to hit Russian oil buyers with secondary tariffs. Earlier this week, President Trump threatened 'tariffs and stuff' if Russia doesn't agree to a ceasefire in 10 days, shortening the 50-day deadline he had given Putin on July 14 to discuss peace or face sanctions. Oil markets reacted on Tuesday to the much shorter deadline, with prices rallying to close 3% higher amid increased concerns that there could be some disruption to Russian oil supply. After weeks of ignoring President Trump's threats to slap Russia with more sanctions and its customers with 'tariffs and stuff', the market now isn't fully discarding the idea that the U.S. President could make good on his threats this Trump has previously backed off from the 'retaliatory' tariffs on the world, pausing these to seek trade deals with individual countries. But trade talks with China and India, Russia's main oil customers, are dragging on amid many sticking points. President Trump announced on Wednesday that Indian goods in the U.S. would be taxed with a 25% tariff, and India will also pay a 'penalty' for buying the vast majority of its military equipment and a lot of Russian energy. 'They have always bought a vast majority of their military equipment from Russia, and are Russia's largest buyer of ENERGY, along with China, at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE — ALL THINGS NOT GOOD! INDIA WILL THEREFORE BE PAYING A TARIFF OF 25%, PLUS A PENALTY FOR THE ABOVE, STARTING ON AUGUST FIRST,' President Trump wrote on Truth Social. In another post later on Wednesday, the President wrote, 'I don't care what India does with Russia. They can take their dead economies down together, for all I care. We have done very little business with India, their Tariffs are too high, among the highest in the World.'President Trump's latest posts have sparked concern among Indian refiners. These have reportedly asked the Indian oil ministry for urgent guidance how to proceed with crude oil flows from Russia arriving after August 1, sources with knowledge of the refiners' procurement practices told Bloomberg on Wednesday. Since the Russian invasion of Ukraine and the bans on Russian oil in the West, India has become a key buyer of Russian crude, alongside China. Russia, for its part, became the single biggest oil supplier to India. OPEC's market share in India slumped to an all-time low of below 50% of India's crude oil imports in the 2024-2025 fiscal year, as Russian oil flows continued to rise and dent the share of the Middle Eastern producers. Even if President Trump doesn't follow up on the threats of 'penalty' for India, procurement would be disrupted in early August as Indian buyers will likely seek alternative sources of crude until the situation becomes clearer. Separately, U.S. Treasury Secretary Scott Bessent warned China that buying Russian and Iranian oil could lead to secondary tariffs due to legislation being considered in Congress. 'I think anyone who buys sanctioned Russian oil should be ready for this,' Bessent said on Tuesday, referring to President Trump's shortened 10-day deadline to Putin to make progress on a peace agreement in Ukraine. If President Trump introduces penalties or secondary tariffs or whatever the word for additional sanctions, the oil market will suffer severe disruptions, and prices will now, the market appears to be calling President Trump's bluff and isn't pricing in too much disruption to Russian oil exports. But should these exports be choked off due to penalties on buyers, the deficit on the market would surge so high that not even OPEC's spare capacity could fill the void left by Russia, analysts say. 'The US and India have struggled to come to a trade deal before Friday's deadline. It's still unclear how big a penalty India faces (the original threat was for a secondary tariff of 100%),' ING commodities strategists Warren Patterson and Ewa Manthey wrote in a Thursday note. 'This is causing plenty of uncertainty for Indian refiners, as well as the broader market, as to whether they can continue to import Russian oil,' the analysts added. However, given President Trump's on-and-off threats, inconsistent tariff policies, and his explicitly stated desire for low oil and energy prices, U.S. penalties on buyers of Russia's oil are not the base-case scenario of analysts. 'We would caution against assigning too high of a probability to a sustained material disruption in Russian supplies at this time, given several considerations that could blunt the effect,' Barclays said earlier this week. These considerations are the Trump Administration's priority to keep energy prices low, Russia's ability to skirt sanctions since 2022, and potentially more difficult U.S. trade talks with China and India if Trump moves to impose secondary tariffs on buyers of Russian oil, Barclays notes. Many market watchers and banks believe that the upside to prices from secondary tariffs is limited, mostly because the Trump Administration wouldn't want to inflate global oil prices, domestic gasoline prices, and energy costs for American consumers. By Tsvetana Paraskova for More Top Reads From this article on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Asharq Al-Awsat
3 hours ago
- Business
- Asharq Al-Awsat
Saudi, Russian Energy Ministers Discuss Oil Market Developments
Saudi Energy Minister Prince Abdulaziz bin Salman and Russian Deputy Prime Minister Alexander Novak held a meeting in Riyadh to discuss recent developments in the global oil market and ongoing cooperation between the two countries within the OPEC+ alliance. As co-chairs of the Saudi-Russian Joint Governmental Committee on Trade, Economic, Scientific, and Technical Cooperation, the two officials also reviewed progress since the committee's eighth session, including the launch of direct flights between Saudi Arabia and Russia and the signing of multiple memorandums of understanding in fields such as industry, education, media, and Hajj and Umrah. The meeting also covered ways to boost bilateral trade and expand economic collaboration. Both sides discussed the upcoming ninth session of the joint committee, scheduled to be held in Riyadh on November 6. According to a statement from the Saudi Ministry of Energy, the ministers reaffirmed the importance of coordination on oil production policy under OPEC+. Russian news agency Interfax reported that Novak and Prince Abdulaziz discussed oil market trends and the outlook for deeper cooperation between the two energy producers. Their meeting followed Monday's virtual session of the OPEC+ Joint Ministerial Monitoring Committee (JMMC), which called for full compliance with output agreements. A separate meeting among eight OPEC+ members is expected this Sunday to decide on a potential oil production increase for September. Goldman Sachs has forecasted that OPEC+ will announce a final production hike of around 550,000 barrels per day for September.
Zawya
5 hours ago
- Business
- Zawya
Saudi, Russian energy ministers discuss oil market and joint committee plans
RIYADH — Saudi Energy Minister Prince Abdulaziz bin Salman and Russian Deputy Prime Minister Alexander Novak held a meeting in Riyadh to discuss recent developments in the global oil market and ongoing cooperation between the two countries within the OPEC+ alliance. As co-chairs of the Saudi-Russian Joint Governmental Committee on Trade, Economic, Scientific, and Technical Cooperation, the two officials also reviewed progress since the committee's eighth session, including the launch of direct flights between Saudi Arabia and Russia and the signing of multiple memorandums of understanding in fields such as industry, education, media, and Hajj and Umrah. The meeting also covered ways to boost bilateral trade and expand economic collaboration. Both sides discussed the upcoming ninth session of the joint committee, scheduled to be held in Riyadh on November 6, 2025. According to a statement from the Saudi Ministry of Energy, the ministers reaffirmed the importance of coordination on oil production policy under OPEC+. Russian news agency Interfax reported that Novak and Prince Abdulaziz discussed oil market trends and the outlook for deeper cooperation between the two energy producers. Their meeting followed Monday's virtual session of the OPEC+ Joint Ministerial Monitoring Committee (JMMC), which called for full compliance with output agreements. A separate meeting among eight OPEC+ members is expected this Sunday to decide on a potential oil production increase for September. Goldman Sachs has forecasted that OPEC+ will announce a final production hike of around 550,000 barrels per day for September. © Copyright 2022 The Saudi Gazette. All Rights Reserved. Provided by SyndiGate Media Inc. (
Bloomberg
19 hours ago
- Business
- Bloomberg
Oil Traders Face Dead Market as Tariff Anxiety Saps Volatility
The oil market is flatlining. After months of uncertainty sparked by global geopolitical tensions and US President Donald Trump's tariff proposals, crude traders have increasingly retreated to the sidelines. That has reduced liquidity and volatility in the crude market, two things often required to generate profits.
Forbes
a day ago
- Business
- Forbes
Bearish Pressure On Oil Prices Remains Elusive
These are confusing times for the oil market, with forecasts continually calling for a growing surplus, yet prices remain strong with some analysts suggesting a new spike is possible. OPEC+ has been criticized for unwinding the voluntary cutbacks more quickly than initially proposed, while fears of demand weakness due to uncertainty about U.S. tariffs suggests they might be overly optimistic about the market balance. In my opinion, one of the best observations explaining market behavior came from John Maynard Keynes, who was an active trader and at one point had massive losses in his portfolio. He opined that economics don't explain market behavior so much as traders' perception of the market economics. That still holds true today, and in no place more so than oil trading. 'Crisis fatigue' is a known phenomenon where traders, facing lengthy geopolitical threats, ultimately grow weary and begin to discount the potential for, or impact of, supply side disruptions. Israel's war in Gaza is one example, as violence involving that country and its various neighbors initially raised fears that the violence will spread to oil producing regions. Eventually, the perceived probability of a disruption receded and the security premium with it. The equivalent now appears to be 'recession fatigue.' Fears of economic dislocation have put downward pressure on the price of oil since Trump's inaugural, with government layoffs suggesting rising unemployment, deportations of workers raising fears of inflation especially for groceries, and tariffs appearing likely to boost inflation and depress spending. Yet unemployment remains low, inflation has only marginally risen, and the economy was strong in the second quarter. But I recently came across a quote from M.I.T.'s Rudiger Dornbusch (in Ken Rogoff's Our Dollar, Your Problem), who observed, "In economics, things take longer to happen than you think they will, and then they happen faster than you thought they would." In other words, just because it hasn't happened, doesn't mean it's not going to. The impact of tariffs is hard to estimate because, first, they have changed repeatedly, including pauses of announced levels, and second, consumer spending might not reflect longer term activity but instead people and businesses front-loading their purchases to beat the tariff implementation. The impact of government layoffs and worker deportations are also hard to estimate, but to date, the anecdotal reports appear to be much worse than the government data. Partly this is because some government layoffs have been paused by the courts, but also, the multiplier effect of the layoffs will take time to accumulate as unemployed workers cut back spending, weakening the local economies. The recent decline in the number of hours worked might be a foretelling of later weakness, but to date, employment levels are not seriously affected. Interestingly, the data on oil demand are mixed: gasoline demand to date is down 0.6% compared to last year, suggesting consumer confidence is poor and people are not taking long driving vacations. On the other hand, distillate demand is 3.7% above last year's, and distillate primarily reflects business activity, such as shipping goods. Possibly, demand surged with orders from consumers trying to beat the tariff imposition, but the evidence is too muddied to provide anything close to a definitive answer. Jet fuel, interestingly, shows continued growth, up 5.4% over last year, which contradicts the impression that consumers are less confident and not spending on long-distant vacations. Typically, jet fuel is the first to be affected by a slowing economy as businesses rein in travel spending. On the supply side, many have been flummoxed by the failure of OPEC+'s production increases to dampen price expectations. Since March, when they decided on April production quotas, OPEC+ has repeatedly called for a rapid unwinding of the voluntary quota reductions of 2.2 mb/d. After each announcement, prices dipped but only briefly before recovering, partly in recognition of the fact that the expected surplus has not materialized as of yet. This reflects the fact that the headline increase in OPEC+ quotas is well above the actual, since many members are already at full production. The voluntary cutbacks of 2.2 mb/d will, in theory, be gone as of August, but the increase in the first three months of the unwinding, expected to be 1.23 mb/d, was only 0.81 mb/d, according to IEA estimates. Supply in July and August is also likely to be less than the quota increase, as only Iraq, the Saudis and Emiratis have much spare capacity: the IEA estimates that they have 3.8 out of the 4.4 mb/d total spare capacity in OPEC+. In theory, Iraq and the Emiratis will not increase further, as they are supposed to be compensating for earlier over-production, but to date their compliance with quotas as been deficient. The inventory picture vaguely supports the mixed indicators, with inventories growing some but less than expected. The IEA estimates that global oil inventories built over 1 mb/d in the first quarter, when they typically decline, and should have increased another 1.6 mb/d in the second quarter. Data and transportation lags mean that the build would not necessarily have shown up as of yet; OECD inventories grew by only 38 million barrels from end-December 2024 to end of May. Assuming the growth in global inventories is twice the OECD levels, that still means that less than half the expected inventory increase has shown up. The broader dataset of what the IEA defines as observed stocks are thought to have grown by 1.74 mb/d in the second quarter, which is more in line with their projected market balance. However, the second quarter typically sees inventory builds as refineries undergo seasonal maintenance. Furthermore, a significant fraction of the stock build was in China and U.S. natural gas liquids, whose exports have been disrupted by the trade conflict with China. So, the increase in OPEC+ quotas looks more prescient than misguided, reflecting actual inventory and price levels, as opposed to the IEA forecast of future stock builds. Weaker shale production in the U.S. could support this outlook, as could stronger sanctions on Iran and Russia. However, those sanctioned countries have a record of maintaining sales over the longer run, and shale producers have had a habit of outperforming expectations. I would argue that neither the bear price case nor the bull price case is certain at this point. If supply holds up better than expectations, and inflation picks up in the U.S. as many, but not all, economists predict, oil demand and the market will definitely weaken and the possibility of an oil price spike will recede. Whether the price collapses will depend more on Saudi reaction to overproduction by Iraq, Kazakhstan and the U.A.E. If inventories do not grow much this summer, the Saudis will probably be in a conciliatory mood, but if the IEA project proves close to the mark, new reductions in the quotas can be expected. In that case, the Saudis would bring greater pressure to be on their recalcitrant partners. Should economic growth in China and the U.S. prove robust, and sanctions reduce supply on the market, the bullish price case will prevail. Shale oil production is almost certain to underperform, given moderate prices at present and rising costs of equipment, especially due to steel tariffs. But quite possibly, any strength in oil prices will encourage the Saudis to push for higher quotas in an effort to cash in, rather than refuse to increase output in solidarity with Russia. Ultimately, both bulls and bears have support for their expectations, but unless U.S. tariffs remain at modest levels and inflation isn't ignited, oil demand growth is more likely to be anemic and only better sanction enforcement will support current price levels.
