NEW YORK: Oil prices edged up about 1 percent on Wednesday after falling to a five-week low in the prior session after US President Donald Trump imposed higher tariffs on India for buying Russian crude and a larger-than-expected US crude storage draw last week.
Brent crude futures rose 80 cents, or 1.2 percent, to $68.44 a barrel at 12:37 p.m. Saudi time, while US West Texas Intermediate crude rose 80 cents, or 1.2 percent, to $65.96.
On Tuesday, both crude benchmarks fell for a fourth session in a row, with Brent closing at its lowest since July 1.
“Prices bounced up on the potential higher tariffs on India but the market is waiting for some sort of a formal implementation as well as which elements in the market are to be affected,” said Rystad analyst Janiv Shah.
Trump issued an executive order on Wednesday imposing an additional 25 percent tariff on goods from India, saying it directly or indirectly imported Russian oil. India, along with China, is a major buyer of Russian oil.
That announcement came despite comments from a Kremlin aide earlier on Wednesday that US envoy Steve Witkoff held “useful and constructive” talks with Russian President Vladimir Putin, two days before the expiry of a deadline set by Trump for Russia to agree to peace in Ukraine or face new sanctions.
Russia was the world’s second-biggest producer of crude oil in 2024 behind the US, according to US federal energy data.
“Expectations appear that India may reduce its buying of Russian crude, but I can’t see them doing so entirely as they have been making supernormal profits on buying cheap Russian crude,” said Ashley Kelty, an analyst at Panmure Liberum.
Rystad’s Shah said a planned supply increase from the OPEC+ group, which includes the Organization of the Petroleum Exporting Countries and allies like Russia, would offset a potential decline in Russian oil supply.
Indian Prime Minister Narendra Modi, meanwhile, will visit China for the first time in over seven years, a government source said on Wednesday, in a further sign of a diplomatic thaw with Beijing as tensions with the US rise.
US OIL INVENTORIES
Oil markets also found support from a bigger-than-expected decline in US crude inventories last week.
The US Energy Information Administration said energy firms pulled 3.0 million barrels of crude from inventories during the week ended Aug. 1.
That was much bigger than the 0.6-million barrel draw analysts forecast in a Reuters poll but was smaller than the 4.2-million barrel decline market sources said the American Petroleum Institute trade group cited in its figures on Tuesday.
