Oil prices rose after US President Donald Trump threatened to punish India for buying Russian energy, in an effort to increase pressure on Moscow to end the war in Ukraine.
Brent oil prices approached $73 per barrel in volatile trading, following a two-day rally that shook prices out of a narrow range this month. Trump said on his social media platform Truth Social that India would face a 25% tariff "plus penalties," criticizing the country as one of Russia's largest energy buyers.
Trump had previously warned of "tariffs and so on" if a ceasefire was not agreed within 10 days and said he was not worried about the impact on the market, suggesting the US could increase production.
The US economy recovered in the second quarter due to a modest increase in consumer spending and a decline in imports, following efforts to secure foreign goods earlier in the year.
Trump has vowed to take economic action against Moscow in the past but has backed off, and his advisers have described the sanctions as likely secondary sanctions targeting countries buying Russian oil. Given the US president's desire for lower prices, questions arise about how far he will go. However, Russia is a major OPEC+ producer, and traders will continue to monitor the impact of new sanctions on export flows.
"President Trump's patience with Russia appears to be wearing thin, and the oil market has reacted to the prospect of potential supply disruptions," said Barclays analyst Amarpreet Singh. "We recognize the upside risk of a potential binary outcome, but are cautious about assigning too high a probability to it."
Oil is on track for a third monthly gain, and the market also remains focused on the US deadline for a trade deal on August 1 and the OPEC+ meeting over the weekend that will decide on September supply. Traders expect the group to agree to a significant increase in crude oil production.
Meanwhile, the American Petroleum Institute reported that US crude inventories rose by 1.5 million barrels last week, according to documents seen by Bloomberg. Government data, including demand figures, will be released on Wednesday. (alg)
Source: Bloomberg
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