Oil prices stabilize as market watches Ukraine war and US tariffs on India
Kyiv • UNN
Oil prices stabilized on Wednesday after falling, as the market watched the war in Ukraine. Investors were assessing the imposition of high US tariffs on India.
Oil prices stabilized on Wednesday after falling in the previous session, as the market monitored developments in Russia's war against Ukraine, and investors weighed significant new US tariffs on India, the world's third-largest oil consumer, UNN reports with reference to Reuters.
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Brent crude futures rose 1 cent to $67.32 a barrel at 03:54 GMT (06:54 Kyiv time), while West Texas Intermediate (WTI) crude futures rose 8 cents to $63.33.
Both contracts fell more than 2% on Tuesday after starting the week at a two-week high.
"There is a lot of uncertainty about how the stalemate over Ukraine will be resolved, which portends volatility in oil prices, but likely within a relatively small range," said Vandana Hari, founder of analytics firm Vanda Insights.
"Over the last week or so, the discount on the theme of peace in Ukraine has been largely offset, but the market is also not ready to price in a significant supply risk premium," Hari added.
US Special Envoy Steve Witkoff said on Tuesday that he would meet with Ukrainian officials in New York this week, adding that Washington was also in talks with Russia, seeking to end the war.
In addition, US plans to impose additional 25% tariffs on Indian exports on Wednesday at 00:01 (07:01 Kyiv time), bringing their total level to 50% and making them among the highest set by Washington, are preventing traders from making a decision.
US President Donald Trump said the higher tariffs were a result of India's purchases of Russian oil, which increased after Russia's invasion of Ukraine, as Western sanctions forced Russia to lower prices for its shipments.
Indian refineries initially limited purchases of Russian oil after the US announced tariffs and increased EU sanctions on the Russian-backed Indian refinery Nayara Energy.
However, state-owned oil companies Indian Oil and Bharat Petroleum resumed purchasing Russian oil in September and October, company sources said last week. Indian Oil, the country's largest refinery, said it would continue to purchase Russian oil depending on the economic situation.
This led some analysts to question how much the increase in US tariffs would affect Indian purchases.
"Secondary tariffs have proven insufficient to deter India from buying Russian oil. The market will closely monitor Russian oil supplies to India in the future to assess what impact secondary tariffs will have on it," Warren Patterson, head of commodity strategy at ING, said in a note.
The war in Ukraine is affecting the oil market in other ways, as drone attacks on Russian refineries lead to a reduction in their production, forcing them to export oil they cannot process.
Russia revised its oil export plan from western ports by 200,000 barrels per day in August compared to the initial plan after last week's attacks, three sources familiar with the situation said on Tuesday.