Oil Prices Rebound As Trump Threatens Tariffs Over India’s Russian Crude Imports

The gains followed a significant decline on Tuesday, where both benchmarks lost more than $1, marking their fourth consecutive session of losses.

Analysts have warned that the US could extend its pressure beyond India, potentially turning its attention to other major buyers of Russian crude.

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Oil prices moved higher on Wednesday, recovering from a five-week low as investors reacted to possible disruptions in global crude flows following US President Donald Trump’s threats of fresh tariffs on India for continuing its purchases of Russian oil.

Brent crude futures were trading up by 48 cents, or 0.7 per cent, at $68.12 a barrel by nearly 12 noon, while US West Texas Intermediate (WTI) crude rose by 43 cents, or 0.7 per cent, to $65.59 per barrel, reported Reuters. The gains followed a significant decline on Tuesday, where both benchmarks lost more than $1, marking their fourth consecutive session of losses.

Focus Shifts to India and China Amid Tariff Speculation

Analysts have warned that the US could extend its pressure beyond India, potentially turning its attention to other major buyers of Russian crude. “There's still plenty of uncertainty over the US imposing secondary tariffs on buyers of Russian oil ... market chatter is growing that China's purchases of Russian oil may come into focus next,” commodity strategists at ING noted.

ING added that the market might absorb the loss if only India pulled back from buying Russian oil, but a broader reduction in global demand for Russian barrels would pose a more substantial threat. “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,” they said. The bigger risk is if other buyers also started to shun Russian oil, the analysts pointed out.

OPEC+ Output Increase Adds to Supply Concerns

Further weighing on market sentiment is OPEC+’s decision to increase production. The oil-producing alliance, which comprises the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, announced on Sunday that it would raise output by 547,000 barrels per day in September. This move brings forward the timeline for phasing out production cuts introduced to stabilise oil prices in recent years.

The increase in supply has triggered renewed fears of oversupply, just as global demand faces potential headwinds due to trade tensions and geopolitical shifts.

India Defends Position as Trump’s Pressure Intensifies

Trump renewed his criticism of India on Tuesday, warning that new tariffs on Indian goods could be imposed within 24 hours in response to its continued imports of Russian crude. He suggested that declining oil prices could put pressure on Russian President Vladimir Putin to seek a resolution to the ongoing conflict in Ukraine.

India, however, has pushed back. Officials in New Delhi labelled Trump’s warnings as “unjustified” and emphasised the country’s right to protect its economic interests, signalling a potential escalation in the ongoing trade dispute.

“If India's imports remain steady, WTI is likely to stay within the $60-$70 range for the rest of the month,” said Yuki Takashima, economist at Nomura Securities. He noted that markets are still evaluating whether India will adjust its buying strategy in light of the US stance.

US Crude Stock Draw Offers Some Support

Adding further complexity to the oil price picture, preliminary data from the American Petroleum Institute indicated that US crude inventories fell by 4.2 million barrels last week, significantly more than analysts’ expectations of a 600,000-barrel decline.

The official weekly report from the US Energy Information Administration is expected later today, and markets are likely to watch closely for confirmation of tightening supplies in the world's largest oil-consuming nation.

As global crude dynamics remain in flux, traders will be monitoring geopolitical developments and inventory data for further direction in the days ahead.