Oil prices remained stable due to the Ukraine war and the US imposition of 25% additional tariffs on Indian exports
Heavy new US tariffs on India, the world's third-largest crude consumer, amid new developments in the Ukraine war, stabilized oil prices on Wednesday after a decline in the previous session. Some Indian refineries resumed purchasing Russian crude despite the tariffs.
Brent crude futures fell 9 cents to $67.13 per barrel at 06:33 GMT, while WTI crude futures fell 8 cents to $63.17.
Both contracts fell more than 2% on Tuesday after opening the week at a two-week high.
There is much uncertainty about how the Ukraine impasse will be resolved. This suggests volatility in crude oil, but it is likely to remain within a relatively narrow range.
Much of the Ukraine peace discount has reversed over the past week, but the market is not ready to price in a large supply risk premium.
US officials will meet with Ukrainian representatives in New York this week, and is also holding talks with Russia to end the war.
Separately, Trump's decision to double tariffs on goods from India to 50% took effect as planned on Wednesday.
However, sources reported last week that state-owned refiners Indian Oil and Bharat Petroleum had resumed purchasing Russian crude for September and October. Indian Oil, the country's largest refiner, said it would continue to purchase Russian crude depending on the economic situation.
This has led some analysts to question the extent to which higher US tariffs will impact Indian purchases.
The secondary tariff was not enough to prevent India from buying Russian oil. The market will closely monitor the flow of Russian oil into India going forward to gauge the potential impact of the secondary tariffs.
Analysts estimate that India has saved at least $17 billion by increasing its oil imports from Russia since the beginning of 2022. Additional tariffs of up to 50% on Indian imports could reduce exports by more than 40%, or approximately $37 billion, in this April-March fiscal year alone.
The war in Ukraine is also impacting the oil market in other ways, they have reduced Russian refineries's activities, forcing it to export crude it cannot process.
Following the refinery attacks, Russia increased its crude oil exports for August. Following last week's attacks, Russia reportedly increased its crude oil export schedule from western ports by 200,000 barrels per day from its initial August schedule.
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