Oil prices plunged more than 1% on Tuesday (August 26th) after surging nearly 2% in the previous session as traders monitored developments surrounding the war in Ukraine and potential disruptions to Russian fuel supplies.
Brent crude fell $1.08, or 1.57%, to $67.72 per barrel at 10:40 GMT, after hitting its highest level since early August in the previous session. West Texas Intermediate (WTI) crude fell $1.13, or about 1.74%, to $63.67.
"Today's moderate decline is driven by risk aversion, with equity markets trading lower," said UBS analyst Giovanni Staunovo. "Geopolitical factors need to be considered, especially what Trump might do if there is no meeting between Russia and Ukraine."
Monday's oil price rally was driven primarily by supply risks following Ukraine's attack on Russian energy infrastructure and the possibility of further US sanctions on Russian oil. Ukraine's attack, in response to Russia's advances in the conflict and its attacks on Ukrainian gas and power facilities, has disrupted Moscow's oil processing and exports and caused gasoline shortages in several Russian regions.
Meanwhile, US President Donald Trump has renewed his threat to impose sanctions on Russia if there is no progress towards a peace deal in the next two weeks. However, several sources told Reuters that US and Russian government officials discussed several energy deals on the sidelines of this month's negotiations to achieve peace in Ukraine.
"Given the significant uncertainty in the oil market caused by the Ukraine conflict and the tariff war, investors will remain reluctant to commit to any one direction in the long term," said PVM Oil Associates analyst Tamas Varga. In the medium term, Brent prices could trade in the $65-$74 range for the foreseeable future, he added.
Imminent US tariffs on India for its continued purchases of Russian oil are also in focus, said Saxo Bank commodity strategist Ole Hansen. India is the third-largest buyer of Russian crude oil. Indian exports could face US tariffs of up to 50%—one of the highest imposed by Washington. (alg)
Source: Reuters
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