Oil Prices Dip After Trump’s Tariff and Sanction Deadline Ease Supply Fears

Oil prices fell on Tuesday after U.S. President Donald Trump’s extended 50-day deadline for Russia to end the war in Ukraine, offering some relief to immediate supply concerns.

Brent Crude and WTI Retreat:

• Brent crude futures dropped 29 cents, or 0.4%, to $68.92 a barrel.
• U.S. West Texas Intermediate (WTI) crude futures fell 35 cents, or 0.5%, to $66.63.

Both contracts had settled more than $1 lower in the previous session, reflecting easing fears about a supply crunch after Trump’s milder stance on sanctions against Russian oil.

Supply Concerns Eased by Trump’s Deadline:

• Trump’s 50-day deadline raised hopes that sanctions on Russian oil could be avoided, helping to ease immediate concerns about supply disruptions.
• While initial concerns had driven prices higher, the 50-day timeline reassured markets, as traders focused on the uncertainty of whether the U.S. would actually impose steep tariffs on countries continuing to trade with Russia.

Potential Sanctions and Economic Pressures:

• Trump’s proposed sanctions could dramatically alter the oil market, especially if countries like China, India, and Turkey—which are the largest buyers of Russian crude oil—have to weigh the benefits of buying discounted Russian crude against the cost of their exports to the U.S.
• Analysts from ING noted that the impact of these sanctions would depend on whether they are implemented and how major oil buyers balance the risks.

U.S. Tariff Plans and Economic Growth Risks:

• In addition to the sanctions threat, Trump announced a 30% tariff on most imports from the European Union and Mexico starting August 1. These tariffs add to concerns that economic growth could slow, reducing global fuel demand and putting downward pressure on oil prices.

Oil Demand Outlook Remains Strong:

• Despite the tariff risks, global oil demand is expected to stay strong through the third quarter, keeping the market balanced in the near term, according to OPEC’s Secretary-General.

Goldman Sachs’ Oil Price Outlook:

• Goldman Sachs raised its oil price forecast for the second half of 2025, citing supply disruptions, shrinking oil inventories, and production constraints in Russia as key factors supporting the outlook for higher oil prices.

As geopolitical tensions continue to unfold, the global oil market remains uncertain, with supply disruptions and tariff concerns continuing to weigh on prices.