Oil prices rose after Israel attacked Hamas leaders in Qatar and after Trump decided on tariffs
Oil prices rose on Wednesday after Israel attacked Hamas leaders in Qatar and US President Donald Trump called on Europe to impose tariffs on Russian oil buyers. However, a weak market outlook prevented further gains. While OPEC+ is increasing production, the long-term oversupply scenario persists.
Brent crude futures were trading at $67 a barrel, up 61 cents, or 0.92%, as of 06:20 GMT. WTI crude futures were trading at $63.24 a barrel, up 61 cents, or 0.97%.
Geopolitical risk premiums rose following Israel's unprecedented attack on Doha, fueling concerns of a short-term supply shortage if OPEC+ members' oil production facilities are hit by Israel.
Prices had closed 0.6% higher in the previous trading session after Israel launched an attack on Hamas leaders in Doha. The Qatari prime minister said the attack could derail Gaza peace talks between Hamas and Israel.
In fact, oil prices reacted relatively mildly due to general market weakness. Both indices rose about 2% shortly after the attack, but retreated after the US assured Doha that such an incident would not recur on its territory. Therefore, it would not have an immediate impact on supply.
The moderate reaction of crude oil prices to this news, coupled with skepticism about Trump's claims of escalating sanctions on Russian oil, leaves crude vulnerable to lower prices.
According to sources, Trump called on the European Union to impose 100% tariffs on China and India to pressure Russian President Vladimir Putin.
China and India have been major buyers of Russian oil since Russia launched its invasion of Ukraine in 2022, despite intense US sanctions pressure, bolstering Russia's financial strength.
However, increasing secondary tariffs on major buyers like China and India could disrupt Russian crude oil exports and constrain global supply, potentially boosting oil prices.
Uncertainty remains about how far the administration will go, as aggressive action could conflict with its efforts to manage inflation and persuade the Fed to lower interest rates.
Investors expect the Fed to cut interest rates at next week's meeting, which would boost economic activity and oil demand.
The supply outlook remains bearish. The U.S. Energy Information Administration (EIA) warned that global crude oil prices will remain under significant pressure in the coming months due to rising inventories as OPEC+ increases production.
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