Oil prices extended Monday’s losses into early Tuesday trade in Asia as President Trump’s threat to sanction Russian supply in 50 days if Putin continues to resist a peace deal in Ukraine eased concerns about an immediate impact on Moscow’s oil exports.
Early on Tuesday in Asian trade, the U.S. benchmark, WTI Crude, fell by 0.85% at $66.43, and the international benchmark, Brent Crude, was down by 0.72% at $68.73 per barrel.
Brent prices fell below $70 a barrel this week, as the markets continue to seek direction amid the return of President Trump’s tariff threats on a number of countries and jurisdictions, including Mexico, the EU, Japan, and South Korea.
Strong seasonal demand and a rebound in China’s refinery throughput in June provided support to oil prices, offsetting much of the tariff-related concerns about the global economy. Near-term fundamentals appear supportive, with OPEC+ adding fewer barrels than the headline figures suggest and demand holding up during the peak summer travel season.
Supply concerns were somewhat eased on Monday after President Trump gave Russia a 50-day deadline to work on a peace deal in Ukraine. Otherwise, Moscow faces new sanctions on its oil exports.
Traders, however, appear to be little convinced that there will be sanctions soon to reduce global oil supply.
Brent prices were down early on Tuesday in Asia after settling 1.6% lower on Monday, as President Trump’s “major statement” on Russia was not an immediate sanctions action by the U.S. The President threatened to slap secondary tariffs of 100% on Russia if Putin fails to make a peace deal.
“The lack of any immediate action and the belief that these threats won’t be carried out help to explain the market reaction,” ING’s commodities strategists Warren Patterson and Ewa Manthey wrote in a note on Tuesday.
Considering the potential large global market deficit in case of 100% tariffs and President Trump’s desire for low oil prices, ING analysts don’t believe Trump “would be keen to follow through with this threat.”
By Tsvetana Paraskova for Oilprice.com
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