Oil rose to the highest since June after US President Donald Trump’s threats to penalize India for buying Russian crude fueled investors’ worries that global supplies may tighten.
West Texas Intermediate climbed 1.1% to settle at $70 a barrel, the highest since June 20, extending a rally that jolted prices out of a narrow range this month. Trump said on his Truth Social platform that India would face a 25% tariff “plus a penalty” while criticizing the country for being one of largest buyers of Russian energy. India’s Nayara Energy is reducing run rates at its refinery as a result of the measures, stoking fears of exacerbated tightness in refined product markets that could bleed into oil prices.
Earlier in the session, oil prices were boosted by data that showed resilience in the US economy in the second quarter. Later in the day though, gains were tempered by Federal Reserve officials downgrading their view of the US economy, raising concerns of domestic demand deterioration in coming months.
“The threat of secondary sanctions on Russian crude supported WTI and Brent crude prices over the last session,” said Daniel Ghali, a commodity strategist at TD Securities. “Algos have now achieved their ‘max long’ position size in WTI, limiting the scope for further inflows,” suggesting the rally may be running out of steam.
Also limiting the price gains, a US government report showed that crude inventories rose by 7.7 million barrels, the biggest increase since January, while stockpiles at the key storage hub in Cushing, Oklahoma also ticked up. At the same time, diesel reserves — which were previously at a multi-decade low for this time of year — increased, shaking trader confidence in a sector that has been underpinning oil-market resilience.
The super-sized stockpile report came after Trump said he wasn’t concerned about the impact of “tariffs and stuff” on the market if a ceasefire between Russia and Ukraine isn’t reached in 10 days.
The US president has vowed economic repercussions against Moscow in the past but held off, and his advisers have cast the penalties as likely secondary sanctions that target countries buying Russian oil. Given Trump’s desire for lower prices, there are questions about how far he will go. Still, Russia is a top OPEC+ producer and traders will keep an eye on any impact new sanctions might have on exports.
Oil is on track for a third monthly gain, Markets remain focused on the US deadline to nail down trade deals by Aug. 1, and the upcoming weekend OPEC+ meeting. Traders expect the group to agree on another bumper increase to crude production.
“We continue to expect prices to subside following the summer, owing to continued supply additions from OPEC+, alongside our expectations for more-resilient-than-expected US supply growth following the Israel-Iran war,” Ghali said.
Oil Prices
WTI for September delivery gained 1.1% to settle at $70.00 a barrel.
Brent for September rose 1.0% to settle at $73.24 a barrel.
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