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Oil prices saw a modest recovery on Wednesday, bouncing back from a five-week low reached the previous day. The rebound was driven by rising concerns over potential supply disruptions, following U.S. President Donald Trump’s threats of tariffs on India over its continued crude purchases from Russia.
As of 0645 GMT, Brent crude futures were up 48 cents, or 0.7%, trading at $68.12 a barrel. U.S. West Texas Intermediate (WTI) crude also saw a 0.7% rise, gaining 43 cents to reach $65.59 a barrel.
On Tuesday, both oil contracts had fallen by more than $1, marking their lowest point in five weeks. This dip was the result of concerns regarding oversupply in the market, triggered by OPEC+’s decision to increase oil production in September. The group, which includes the Organization of the Petroleum Exporting Countries (OPEC) and its allies, agreed to raise output by 547,000 barrels per day, effectively ending its most recent output cuts earlier than expected.
OPEC+ has been curtailing oil production for several years in a bid to stabilize prices, but with an eye on regaining market share, the group has rolled out a series of accelerated output hikes this year.
U.S.-India Tensions and Potential Impact on Supply
Adding to the volatility in the market, U.S. demands for India to halt its purchases of Russian oil have created tension in the global supply chain. The U.S. seeks to put pressure on Moscow in its ongoing conflict with Ukraine, and Trump’s administration has threatened to impose higher tariffs on Indian goods if the country continues its oil trade with Russia.
Trump emphasized that declining energy prices could press Russian President Vladimir Putin into halting the war, a statement that further fueled concerns over potential supply disruptions. However, India has called these threats “unjustified” and vowed to safeguard its economic interests, intensifying the trade rift between the two nations.
Despite this, market analysts have pointed to the recent data showing a significant decrease in U.S. crude inventories as an optimistic factor for the oil market. Industry data from the American Petroleum Institute (API) reported a decline of 4.2 million barrels in U.S. crude stockpiles, much larger than the expected 600,000-barrel drop.
Market Outlook
While the market is still grappling with concerns about a potential oversupply due to OPEC+’s production hike, the current geopolitical tensions and reduced U.S. crude inventories are offering some support to oil prices. As traders assess the impact of Trump’s tariff threats and global demand for oil, the outlook for oil prices remains fluid, with geopolitical risks continuing to shape market sentiment.
