LONDON: Oil prices climbed on Wednesday, rebounding from a five-week low in the previous day, in response to concerns over potential supply disruptions after US President Donald Trump threatened India with higher tariffs over its Russian crude purchases.
Brent crude futures gained 95 cents, or 1.4%, to $68.59 a barrel by 0901 GMT, while US West Texas Intermediate crude was up 92 cents, or 1.4%, at $66.08 a barrel.
Both oil contracts fell by more than $1 on Tuesday to settle at their lowest in five weeks, marking a fourth session of losses.
Trump’s renewed threats of higher tariffs on India for buying Russian energy supported the market, but they were partially offset by increased OPEC+ supply arriving in September and potential re-emergence of Venezuelan barrels, Tamas Varga of PVM Oil Associates said in a note.
OPEC+ agreed on Sunday to raise oil production by 547,000 barrels per day for September, marking a full and early reversal of their largest tranche of output cuts.
“If India were to stop buying Russian oil amid tariff threats, we believe the market would be able to cope with the loss of this supply,” ING commodity strategists said, adding that the bigger risk was if other buyers also started to shun Russian oil.
US envoy Steve Witkoff arrived in Moscow on Wednesday on a last-minute mission to seek a breakthrough in the Ukraine war, two days before the expiry of a deadline set by Trump for Russia to agree to peace or face new sanctions.
“Overall, the outlook for the Russia-Ukraine war remains uncertain but the ongoing conflict and the threat of escalating tariffs is likely to keep oil prices supported in the near term until there is more clarity on the potential impact of tariffs on oil exports,” analysts at Roth Capital Markets said in a note late on Tuesday.
“We expect minimal disruption to Russian oil exports as we think that China can import the vast majority of Russian crude.”
The market was also seeing some support from US crude inventories falling last week, Varga added, as sources citing American Petroleum Institute figures said on Tuesday that stockpiles fell by 4.2 million barrels.
That compares with a Reuters poll estimate of a 600,000 barrels draw for the week to August 1.
