Oil prices rise amid Trump’s threats of tariffs on India
6 August 09:17
World oil prices rose on Wednesday, recovering from a five-week low the day before. The rise was caused by fears of possible supply disruptions following US President Donald Trump’ s threats to impose tariffs on India, "Komersant Ukrainian" reports citing Reuters.
Futures for Brent crude oil rose 43 cents, or 0.6%, to $68.07 per barrel as of 05:30 Kyiv time. US WTI crude rose 40 cents, or 0.6%, to $65.56 per barrel.
Both oil contracts fell by more than $1 on Tuesday, reaching their lowest level in five weeks and recording their fourth consecutive session of decline. This was due to fears of oversupply from OPEC’s planned production increase in September.
Trump vs. India
Trump on Tuesday again threatened higher tariffs on Indian goods within the next 24 hours. The US President also said that lower energy prices could force Russian leader Putin to end the war in Ukraine.
New Delhi called Trump’s threats “unfounded” and vowed to defend its economic interests by deepening trade disputes between the two countries.
At the same time, if India agrees to such demands, supply flows may be disrupted, as Indian refiners will look for alternatives, and Russian oil will be redirected to other buyers.
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What analysts say
Experts say that if India stopped buying Russian oil because of the threat of tariffs, the market would be able to cope with the loss of these supplies. However, a bigger risk would be if other buyers also started avoiding Russian oil.
“There is still a lot of uncertainty about the US imposing secondary tariffs on Russian oil buyers… there is growing talk in the market that Chinese purchases of Russian oil could be the next target,”
– iNG strategists said on Thursday.
“Investors are assessing whether India will reduce its purchases of Russian oil in response to Trump’s threats, which could limit supply, but it remains unclear whether this will actually happen.”
– commented Yuki Takashima, economist at Nomura Securities.
According to him, if India’s imports remain stable, WTI is likely to remain in the $60-70 range by the end of the month.
Production and reserves
On Sunday, OPEC members agreed to raise oil production by 547 thousand barrels per day in September. This step will complete the last production cut ahead of schedule.
OPEC produces about half of the world’s oil and has been limiting production for several years to support the market. This year, however, the group has introduced a series of accelerated production increases to regain market share.
Nomura’s Takashima also drew attention to industry data showing a decline in oil inventories in the United States, the world’s largest oil consumer, which supports the oil market.
According to sources citing data from the American Petroleum Institute, crude oil inventories in the US fell by 4.2 million barrels last week. This is a lot compared to the estimates of a Reuters poll of a 600,000 barrel decline in the week to August 1.
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