Oil rises after five-week low as Trump’s India threat stirs supply fears

SINGAPORE: Oil prices edged higher on Wednesday, recovering from a five-week low seen a day earlier, as markets reacted to potential supply disruptions following US President Donald Trump’s warning of possible tariffs on India over its continued imports of Russian crude.

By 0119 GMT, Brent crude futures were trading at $67.93 per barrel, up 29 cents, or 0.4 percent, while US West Texas Intermediate (WTI) crude gained 28 cents to reach $65.44 per barrel.

The modest gains came after both benchmarks slumped by over a dollar on Tuesday, closing at their lowest levels in over a month. The decline was driven by concerns of oversupply, following OPEC+’s decision to boost production from September.

Investors are now closely watching geopolitical developments. Trump, who has been vocal about pressuring countries to reduce trade with Russia, issued a fresh warning on Tuesday, threatening to impose new tariffs on Indian goods within 24 hours if New Delhi does not scale back its Russian oil purchases. He argued that falling energy prices could weaken Moscow’s position in the Ukraine conflict.

India swiftly rejected Trump’s warning, calling it “unjustified” and asserting it would safeguard its economic interests, further straining trade ties between the two nations.

Analysts say the situation could create fresh uncertainty in global oil supply. “Markets are weighing whether India will respond to the pressure, and if it does reduce Russian crude imports, it could tighten global supply,” said Yuki Takashima, an economist at Nomura Securities. “But unless there’s a major shift, WTI is likely to remain within the $60 to $70 range through the rest of the month.”

Adding to the supply-side developments, OPEC and its allies (OPEC+), which collectively produce around half of the world’s oil, announced on Sunday a 547,000 barrels per day increase in output for September. The move marks an early end to their latest round of production cuts aimed at supporting prices and comes amid the group’s efforts to reclaim market share after years of curbs.

Meanwhile, signs of tightening inventories in the US have offered some support to oil prices. Industry data showed a 4.2 million-barrel drop in US crude stockpiles last week, according to sources citing figures from the American Petroleum Institute. That was well above the 600,000-barrel draw forecast in a Reuters poll.

Traders now await official inventory figures from the US Energy Information Administration, which are due later on Wednesday.

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