Oil & Gas

Business:
Oil markets opened the week on a firm note, with Brent crude hovering near $68 a barrel and West Texas Intermediate above $63, extending last week’s nearly 3% gain. Traders remain focused on supply disruptions and U.S. trade measures, particularly Washington’s threat to double tariffs on all imports from India to 50% over its continued purchases of Russian crude. Indian refiners, however, signaled they would maintain flows from Moscow, underscoring how commercial interests and access to discounted barrels continue to drive business decisions despite mounting U.S. pressure. At the same time, subdued summer trading volumes and OPEC+’s decision to restore production capacity have kept prices rangebound, leaving market participants cautious about committing strongly in either direction.

Economy:
The broader economic backdrop also played a role in supporting crude, with risk assets from commodities to equities climbing after Federal Reserve Chair Jerome Powell signaled a possible return to interest-rate cuts as soon as next month. A weaker dollar and easier credit conditions could stimulate global growth, bolstering oil demand in the months ahead. However, concerns remain over fundamentals, as futures are still about 9% lower this year amid expectations of oversupply in upcoming quarters. Analysts caution that while Fed easing may provide a tailwind, the impact could take time to filter into real demand, leaving energy markets vulnerable to any dip in industrial activity or trade slowdowns tied to tariff disputes.

Geopolitical:
Geopolitics remain the central wildcard, with Washington intensifying diplomatic efforts to broker peace in Ukraine even as U.S. President Donald Trump threatened “massive sanctions” on Russia unless progress is made within weeks. Markets interpreted this dual message swinging between escalation and restraint as a sign of uncertainty in U.S. policy direction, which complicates pricing for Russian crude and its global buyers. For India, already facing punitive tariffs, the risks extend to its export competitiveness in the U.S. market and its wider trade relationship with Washington. Meanwhile, the potential for renewed sanctions or expanded secondary measures looms over other major importers like China, leaving the oil market highly sensitive to shifts in U.S. foreign policy and negotiations over Europe’s most consequential war in decades.