Oil prices plummeted on Tuesday (July 15) after U.S. President Donald Trump's lengthy 50-day deadline for Russia to end its war in Ukraine and avoid sanctions eased existing supply concerns.

Brent crude futures fell 56 cents, or 0.8%, to $68.65 a barrel at 07:36 GMT, while U.S. West Texas Intermediate crude fell 62 cents, or 0.9%, to $66.36.

"The focus was on Donald Trump, there were concerns he might soon impose sanctions on Russia, and now he's given another 50 days," said Giovanni Staunovo, a commodities analyst at UBS. "Concerns about imminent additional tightening in the market have eased. That's the main news."

Oil prices briefly rose on the prospect of sanctions, but then weakened as the 50-day deadline raised hopes that sanctions could be avoided, and traders weighed whether the US would actually impose high tariffs on countries that continue to trade with Russia. If Trump does follow through and the proposed sanctions are implemented, "it would drastically change the oil market outlook," analysts at ING said in a note on Tuesday.

"China, India, and Turkey are the largest buyers of Russian crude. They will need to weigh the benefits of buying Russian crude at a discount to the cost of their exports to the US," the ING note said.

Trump announced new weapons for Ukraine on Monday, and on Saturday said he would impose 30% tariffs on most imports from the European Union and Mexico starting August 1, adding similar warnings to other countries. Tariffs risk slowing economic growth, which could weaken global fuel demand and lower oil prices. China's economy slowed in the second quarter, data showed on Tuesday, with markets bracing for a weaker second half as exports lose momentum, prices continue to fall, and consumer confidence remains low.

Tony Sycamore, an analyst at IG, said China's economic growth was above consensus, primarily due to strong fiscal support and increased production and exports for the US to avoid tariffs. "The economic data released today is concerning. Today's weak Chinese data has direct implications for commodities, including iron ore and crude oil," he said.

Elsewhere, oil demand is expected to remain "very strong" through the third quarter, keeping the market balanced in the near term, the secretary-general of the Organization of the Petroleum Exporting Countries (OPEC) said, according to Russian media reports. (alg)

Source: Reuters