Oil prices continued to slide in Asian trading on Monday after posting monthly declines in August, as investors appeared to discount the risk of immediate supply disruptions from potential secondary sanctions on Russian oil. Market attention turned instead to Chinese factory data for signs of demand.
By 23:01 ET (03:01 GMT), Brent crude for October delivery was down 0.4% at $67.21 per barrel, while West Texas Intermediate (WTI) futures also fell 0.4% to $63.78 per barrel. Both contracts posted losses of more than 7% in August, weighed down by fears of oversupply amid continued OPEC+ production increases.
Sanction Concerns on Russia Fail to Move Markets
Prospects for a Russia-Ukraine peace deal have dimmed following U.S. President Donald Trump’s call last month for Ukrainian President Volodymyr Zelenskyy and Russian President Vladimir Putin to hold direct talks before considering a trilateral summit in Washington. Yet fears of supply disruptions from possible sanctions on Russian oil buyers have eased.
“Oil prices settled lower last week despite growing European calls for secondary sanctions on buyers of Russian oil and gas. The mild reaction may suggest the market is becoming increasingly numb towards sanction risks,” ING analysts said in a note.
“And that to be effective, sanctions would likely need US backing. Up until now, the US has only imposed secondary tariffs on India for its purchases of Russian oil, not other key players like China,” they added.
In a move linked to India’s ongoing Russian crude purchases, a new 25% U.S. tariff on Indian imports came into force last week, doubling the total duty to 50% as of August 27.
Demand Outlook Remains Mixed Amid Chinese Data
Traders also weighed seasonal factors, as U.S. fuel demand is expected to ease with the end of the summer driving season. Additional OPEC+ production in the months ahead could further increase supply, raising concerns that inventories may grow if economic growth remains sluggish.
The outlook for demand is further clouded by mixed economic signals from China. The official manufacturing PMI contracted in August, whereas a private RatigDog survey showed factory activity expanding at its fastest pace in five months.
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