Oil prices held gains this week as traders grappled with President Donald Trump's threat to impose punitive tariffs on Russian energy buyers.

West Texas Intermediate crude oil prices were little changed on Thursday, but closed at a six-week high the day before. The US president said he would impose tariffs on Indian exports and penalties on its energy purchases from Russia starting August 1, the latest in a series of comments in which he expressed anger over the lack of a ceasefire in Ukraine.

While the market impact of a disruption in Indian purchases could be significant, as Moscow would have to find new buyers if it lost one of its biggest customers, the relatively calm price movement suggests there is little expectation that Trump will follow through for now.

This is the latest sign that the oil market is increasingly reacting only to significant supply disruptions. Although Trump has repeatedly threatened measures that could hurt production in producing countries, from Venezuela to Iran and Russia, since taking office, there has been no substantial impact on global supply so far, even when the US bombed Iran's nuclear facilities.

Indian oil refiners are seeking clarity from the government in New Delhi. A senior executive at a major oil refiner said his company would try to source more crude from the Middle East and Africa, and is seeking government guidance on how to do so.

"Finding a replacement for Russian crude in the global market will be difficult," Goldman Sachs analysts, including Yulia Zhestkova Grigsby, wrote in a report. "While the exact details of potential economic sanctions remain unclear, investors are focused on the risks of potential 100% tariffs on countries importing Russian oil."

Trump's threat came hours before the US issued its most sweeping Iran-related sanctions in seven years, targeting an international shipping network controlled by prominent oil trader Hossein Shamkhani, whose father is a senior adviser to Supreme Leader Ayatollah Ali Khamenei.

Although the designation marks the biggest escalation in action since Trump returned to office, US officials said they do not expect the restrictions to cause lasting disruption to global oil markets, noting that most of the oil sold by the network is destined for China.

Collectively, these actions are a reminder of the kind of headline-driven volatility oil traders currently face.

Trump has also imposed an August 1 deadline for countries to finalize trade deals with the US, with South Korea and the European Union recently reaching agreements.

These risks have made it difficult for some of the world's top physical traders to make money. Shell Plc CEO Wael Sawan said on Thursday that his company had adopted a risk-off approach to crude oil in the previous quarter due to greater volatility, echoing comments from other major oil company executives in recent weeks. (alg)

Source: Bloomberg