Oil prices fell on Tuesday after U.S. President Donald Trump’s announcement of a 50-day deadline for Russia to end the war in Ukraine eased immediate fears of supply disruption and potential sanctions.
By 06:10 GMT, Brent crude had declined by 12 cents (0.2%) to $69.09 per barrel, while U.S. West Texas Intermediate (WTI) dropped 16 cents (0.2%) to $66.82. Both benchmarks had fallen more than $1 in the previous session.
According to Priyanka Sachdeva, senior market analyst at Phillip Nova, “Trump’s softer tone on Russian oil sanctions reduced concerns about a supply squeeze, although his ongoing tariff threats continue to weigh on global economic sentiment.”
Oil prices initially rose on speculation of sanctions but reversed gains as traders viewed the 50-day window as a potential opportunity to avoid punitive measures. There is also growing skepticism over whether the U.S. will enforce steep tariffs on countries still importing Russian crude.
Analysts at ING noted that if the proposed sanctions are implemented, it would significantly reshape the oil market. China, India, and Turkey, major buyers of Russian oil, would face a tough decision between purchasing discounted crude and risking higher export tariffs to the U.S.
Trump on Monday also announced new weapons shipments to Ukraine, and over the weekend said he would impose 30% tariffs on most imports from the European Union and Mexico starting August 1, adding to pressure on other trade partners.
These tariff threats raise concerns about slower global economic growth, which in turn could dampen fuel demand and put further pressure on oil prices.
Adding to the bearish sentiment, China’s economy showed signs of slowing in the second quarter, with data on Tuesday revealing weakening exports, falling prices, and low consumer confidence.
Tony Sycamore of IG said that while China’s GDP beat expectations, the positive result was driven mainly by strong fiscal stimulus and front-loaded export activity to the U.S. ahead of potential tariffs. He added, “The weak data has clear implications for key commodities like iron ore and crude.”
Despite near-term headwinds, OPEC’s secretary general said in a statement carried by Russian media that oil demand is expected to remain “very strong” through the third quarter, helping to keep global markets balanced.
