Oil bounces higher as Trump threatens Russian oil buyers

Oil prices rose on Wednesday, rebounding from a five-week low recorded the previous day, as traders focused on US President Donald Trump’s threat to impose higher tariffs on India over its purchases of Russian crude, along with a larger-than-expected drop in US crude inventories.

Brent crude futures rose by 90 cents, or 1.3%, to $68.54 a barrel by 09:36 GMT, while US West Texas Intermediate (WTI) gained 92 cents, or 1.4%, to reach $66.08.

Both benchmarks had dropped by more than $1 on Tuesday, closing at their lowest levels in five weeks and marking a fourth consecutive session of losses.

Ashley Kelty, analyst at Panmure Liberum, said: “Oil prices are rising today as markets await reactions from India and China to the threat of secondary sanctions.”

She added: “There are expectations that India might reduce its purchases of Russian crude, though I don’t believe it will stop entirely — the country is making extraordinary profits from cheap Russian oil.”

The market was supported by Trump’s renewed threat on Tuesday to impose higher tariffs on India due to its energy dealings with Russia. India, along with China, is among the largest buyers of Russian oil.

In a related development, US envoy Steve Witkoff arrived in Moscow on Wednesday on an emergency mission aimed at achieving a breakthrough in the Ukraine war — just two days before Trump’s deadline for Russia to agree to a peace deal or face new sanctions.

Analysts at Roth Capital Markets wrote in a Tuesday evening note: “Overall, the outlook for the Russia-Ukraine conflict remains uncertain, but the ongoing war and threats of escalating tariffs are likely to keep oil prices supported in the near term until the potential impact of those tariffs on oil exports becomes clearer.”

They added: “We expect limited impact on Russian oil exports, as we believe China can absorb the vast majority of the country’s crude.”

The market also found support from a decline in US crude inventories last week. According to two sources citing data from the American Petroleum Institute on Tuesday, inventories fell by 4.2 million barrels.

That figure far exceeds the 600,000-barrel draw forecasted in a Reuters poll for the week ending August 1.

Giovanni Staunovo, analyst at UBS, commented: “Yesterday’s API data showing a draw in US crude stocks was supportive for prices,” adding that “supply disruption fears from US-India tensions are already priced into the market.”