Traders Buoyed By Trump's "Soft" Stance On Russia, Oil Dips Minimally

Analysts consider a shift in global oil markets if Trump imposes the tariffs: File Image/Pixabay

U.S. president Donald Trump yet again drove oil trading, with the commodity on Tuesday dropping  less than 1 percent after Trump gave Russia 50 days to end the war in Ukraine or face stiff sanctions.

Trump's move followed Washington's provision for new weapons for Ukraine via NATO; the sanctions consist of 100 percent tariffs on Russian goods as well as secondary sanctions on other countries that buy its exports, and reportedly Germany, Finland, Denmark, Sweden, Norway, the United Kingdom, the Netherlands, and Canada all expressed support for the brash billionaire's strategy, which does not directly target energy infrastructure.

Priyanka Sachdeva, senior market analyst at Phillip Nova, said, "Trump's softer stance on sanctioning Russian oil has eased fears of an imminent supply shortage, even as his broader tariff agenda continues to add pressure on global economic growth."

ING analysts added in a report that if sanctions were ultimately enforced, it could shift the global oil outlook: "China, India, and Turkey — the top buyers of Russian crude — would need to weigh the advantage of discounted oil against the risk of retaliatory U.S. tariffs on their exports."

As of 0342 GMT, Brent was down 50 cents, or 0.7 percent, at $68.71 per barrel, and West Texas Intermediate was down 46 cents, also 0.7 percent, at $66.52.

Bloomberg noted that futures on Tuesday also came under pressure as investors liquidated their positions in WTI's prompt spread ahead of the contract expiry: "US crude's prompt spread — the difference between its two nearest contracts — held steady at around $1.16 a barrel in backwardation; while that's still a bullish pattern, with nearer-term prices above those further out, it's notably lower than Monday's peak of $1.49."

Also on Tuesday, refining throughput rose to more than 15.2 million barrels per day in June, the strongest pace since September 2023, according to Bloomberg calculations.

However, Rebecca Babin, a senior energy trader at CIBC Private Wealth Group, pointed out that "investors appear to be discounting China-related strength, viewing it as front-end loading ahead of potential tariffs rather than a sustainable demand signal.

"The overriding focus for crude remains the expected oversupply in the second half of the year."