Oil prices held near recent lows in Asian trading on Wednesday, after sharp declines in the previous session, as traders weighed the impact of new U.S. tariffs on India and smaller-than-anticipated declines in U.S. crude inventories.
By 22:00 ET (02:00 GMT), Brent crude for October delivery edged down 0.1% to $67.16 per barrel, while October WTI futures dipped 0.1% to $63.17 per barrel. Both contracts fell over 2% on Tuesday, reflecting fading optimism about a near-term Russia-Ukraine peace agreement.
Secondary India Tariffs Now Active
In response to India’s continued purchases of Russian crude, the U.S. imposed an additional 25% tariff on Indian imports, doubling total duties to 50% starting at 12:01 a.m. ET on August 27. The move is aimed at curbing India’s ties with Russia amid the ongoing conflict in Ukraine.
“The secondary tariff has not been enough to stop India from buying Russian oil. Initially, secondary tariffs saw Indian refiners pause purchases. They have resumed purchases,” ING analysts said.
“The market will be watching Russian oil flows to India closely going forward to gauge the impact, if any, of secondary tariffs,” they added.
The war in Ukraine remains the key driver of market sentiment. U.S. President Donald Trump has positioned himself as a potential mediator but warned last week that new sanctions on Moscow could be imposed if progress toward a peace deal is not achieved within two weeks.
U.S. Crude Inventory Declines Fall Short of Expectations
The American Petroleum Institute (API) reported Tuesday that U.S. crude stocks fell by 970,000 barrels in the week to August 22, less than the 1.7 million-barrel draw expected by analysts. Gasoline inventories dropped by 2.1 million barrels and distillates by 1.5 million barrels.
“The draw in distillate stocks was slightly supportive for the middle distillate market, particularly given that we are in a period where stocks usually grow,” ING analysts noted.
Market participants are now awaiting the official U.S. Energy Information Administration (EIA) data later Wednesday for confirmation of the demand outlook.
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