Oil falls as Trump gives Russia 50 days to avoid new sanctions
Brent crude futures settled US$1.15, or 1.63 per cent, lower to US$69.21 a barrel. US West Texas Intermediate crude futures lost US$1.47, also 2.15 per cent, to US$66.98.
Trump announced new weapons for Ukraine and threatened to slap new sanctions on buyers of Russian exports unless Moscow agrees to a peace deal in 50 days.
Oil prices rallied early, on expectations that Washington would impose steeper sanctions. But prices retreated as traders weighed whether the US would actually impose steep tariffs on countries that continue to trade with Russia.
'The market took it as a negative because there seemed to be a lot of time to negotiate,' said Phil Flynn, senior analyst with Price Futures Group. 'The fear of immediate sanctions on Russian oil is further off in the future than the market thought this morning.'
China and India are among the top destinations for Russian crude oil exports.
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'The chance of US imposing 100 per cent tariffs on China are slim to none... It would force inflation to go through the moon,' said Bob Yawger, director of energy futures at Mizuho.
Last week, Trump said he was due to make a 'major statement' on Russia on Monday, having expressed his frustration with Russian President Vladimir Putin due to the lack of progress in ending the war in Ukraine.
Russia's seaborne oil product exports in June were down 3.4 per cent from May at 8.98 million metric tons, data from industry sources and Reuters calculations showed.
A bipartisan US bill that would hit Russia with sanctions gained momentum last week in Congress. European Union envoys, meanwhile, are on the verge of agreeing an 18th package of sanctions against Russia that would include a lower oil price cap.
Investors were also eyeing the outcome of US tariff talks with key trading partners.
The European Union and South Korea said on Monday they were working on trade deals with the US that would soften the blow from looming tariffs as Washington threatens to impose hefty duties from Aug 1.
EU member states find Trump's tariff threat 'absolutely unacceptable', Danish Foreign Minister Lars Lokke Rasmussen said on Monday during a joint press conference with EU's trade chief Maros Sefcovic in Brussels.
Providing some support, China's June oil imports increased 7.4 per cent on the year to 12.14 million barrels per day, the highest since August 2023, according to customs data released on Monday.
'There is still a perceived tightness in the market, with most of the inventory build in China and on ships, and not in key locations,' UBS analyst Giovanni Staunovo said.
The International Energy Agency said last week the global oil market may be tighter than it appears in the short term. However, the agency boosted its forecast for supply growth this year, while trimming its outlook for growth in demand, implying a market in surplus. REUTERS
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