Traders had been bracing for potential supply disruptions as former U.S. President Donald Trump signaled sanctions against Russia. However, his 50-day deadline to end the Ukraine war has eased fears of near-term action.
UBS analyst Giovanni Staunovo noted that the delay reduced expectations of any immediate market tightening, leading to a retreat in crude prices.
ING analysts cautioned that if sanctions are eventually imposed, they could significantly alter global crude flows.
Russia’s top buyers—China, India, and Turkey—would be forced to reconsider purchases under threat of secondary U.S. sanctions, creating a real risk of supply reallocation or trade disruptions.
Tariffs and Slowing Chinese Economy Add Pressure to Demand Outlook
On the demand side, Trump’s announcement of 30% tariffs on EU and Mexican imports starting August 1 has renewed concerns about weaker trade and slowing growth. These protectionist measures increase the likelihood of reduced fuel consumption, weighing on oil prices.
China’s second-quarter GDP data came in stronger than expected, but analysts attributed the result to short-term government support and a rush to export before tariffs take effect.
