Oil prices fell in choppy trading as traders took stock of OPEC+’s latest bumper supply increase while US President Donald Trump vowed to penalize India for buying Russian crude, mitigating some fears about a glut.
West Texas Intermediate crude slid 1.5% to settle close to $66 a barrel after Trump’s renewed warnings of increased levies on India over purchases of Russian oil. The latest fluctuation came after prices hit the lowest in a week as OPEC+ endorsed an additional 547,000 barrels-a-day of output for next month.
“We still have this looming deadline for Russia to come to the table for a ceasefire with Ukraine,” said Frank Monkam, head of macro trading at Buffalo Bayou Commodities. Trump’s reiteration of possible tariffs on India for buying Russian oil “reminded the market that this whole thing is still in limbo.”
US Special Envoy Steve Witkoff is expected to visit Russia on Wednesday, Tass reported, citing people familiar with the plans. Some investors — already wary of Trump’s habit of threatening economic penalties just to reverse course days later — see the development as a clue that an agreement between Washington and Moscow may be reached before any significant penalties come to pass.
Still, the impact of any potential measures is uncertain. “The oil market is still assigning a low probability to anything meaningful from the White House as it relates to Russian oil exports,” said Pavel Molchanov, an analyst at Raymond James. “The only way to zero out Russian oil exports would be to implement a full-fledged naval blockade of the Russian coastline, which no one is seriously considering.”
Prior to Trump’s latest comments, Indian Prime Minister Narendra Modi struck a defiant tone, signaling his country would continue to buy Russian oil. India has become a major buyer of the Kremlin’s crude since the 2022 invasion of Ukraine and any disruption to those purchases would force it to look elsewhere for supplies, introducing a bullish driver to markets.
Crude is coming off three months of gains. Prices slumped Friday as soft US jobs data raised concern the world’s largest economy was slowing amid Trump’s trade measures. While global crude stockpiles grew early in the year, much of the increase has been in China, far away from the market’s vital pricing points.
The September output hike announced by OPEC+ over the weekend stands to complete the reversal of a cutback made in 2023 by an eight-member sub-group in the alliance that includes Saudi Arabia and Russia. The progressive restoration of supplies over recent months has been widely seen as a concerted push by the cartel to reclaim market share. It’s uncertain whether additional curtailed output will be restored in the coming months, or the group will now stand pat.
The latest increase may reinforce speculation that global crude supplies will run ahead of demand into the end of the year, lifting commercial stockpiles, compressing key market timespreads, and setting the scene for a selloff.
Oil Prices
WTI for September delivery dropped 1.5% to settle at $66.29 a barrel.
Brent for October fell 1.3% to $68.76 a barrel.
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