Oil dropped after a four-day gain as investors waited for clearer signals on supplies, while also tracking the wider market fallout from President Donald Trump's move to oust a Federal Reserve governor.

Brent fell toward $68 a barrel, while West Texas Intermediate was below $65. On Monday, the Department of Homeland Security issued a draft notice to double tariffs on all Indian imports to penalize the country for buying Russian crude. The move — due to take effect Wednesday — is part of broader effort to broker a peace deal between Russia and Ukraine. 

In wider markets, stocks fell along with other risk assets after Trump removed Fed Governor Lisa Cook, raising concerns about the independence of the central bank just as data have pointed toward a softening in the economy, including the labor market. Over time, that could hurt energy usage. 

Crude has traded in a narrow band for most of August, with traders assessing the impact of US levies, as well as the longer-term consequences of a series of major supply hikes from OPEC+. The International Energy Agency warned earlier this month that the global oil market was on track for a record surplus next year as demand growth slows while supplies swell.

"If we go ahead with the doubling of Indian tariffs, the market will again question Russian flows, and could see a near-term retest up toward $70," said Robert Rennie, head of commodity and carbon research at Westpac Banking Corp. The market was also focused on a recent spate of Ukrainian attacks against Russian energy infrastructure, he said.

On tariff plans, Trump has also indicated he could impose additional levies on Russian trading partners or sanctions targeting Moscow if there was no progress on a deal, saying there could be "very big consequences" if nothing happened in the coming weeks. The Indian government has decried the so-called secondary tariffs as unfair.

Source: Bloomberg