LONDON: Oil prices dropped on Tuesday as U.S. President Donald Trump’s 50-day deadline for Russia to end the Ukraine conflict eased immediate concerns over potential supply disruptions.
Brent crude futures fell 56 cents, or 0.8%, to $68.65 a barrel, while U.S. West Texas Intermediate crude futures declined 62 cents, or 0.9%, to $66.36.
“The focus has been on Donald Trump, there was some fear he might target Russia with sanctions immediately and now he has given another 50 days,“ said Giovanni Staunovo, commodity analyst at UBS.
“Those fears about an imminent additional tightness in the market have dissipated. That’s the main story.”
Earlier gains in oil prices, driven by fears of sanctions, were reversed as traders reassessed the likelihood of steep U.S. tariffs on countries continuing to trade with Russia. Analysts at ING noted that if sanctions were imposed, “it would drastically change the outlook for the oil market.”
China, India, and Turkey, the largest buyers of Russian crude, would need to balance discounted oil purchases against potential U.S. trade penalties. Meanwhile, Trump announced new weapons for Ukraine and warned of 30% tariffs on EU and Mexican imports from August 1, raising concerns over global economic growth and fuel demand.
China’s economic slowdown in Q2 added further pressure, with weak exports, falling prices, and low consumer confidence signalling potential demand risks. Tony Sycamore of IG noted that China’s growth was propped up by fiscal stimulus and pre-tariff export surges, but “today’s tepid Chinese data has direct implications for commodities including iron ore and crude oil.”
Despite these concerns, OPEC’s secretary general stated that oil demand remains strong in Q3, keeping markets balanced in the near term. – Reuters
