The oil market was down on Tuesday after US President Donald Trump’s 50-day deadline for Russia to end the war in Ukraine and avoid sanctions eased concerns about any immediate supply disruption.
The price of Brent crude declined by 50 cents or 0.7 per cent to quote at $68.71 a barrel and the US West Texas Intermediate (WTI) crude depreciated by 46 cents or 0.7 per cent to $66.52 per barrel.
The market had risen when it was discovered that the American President might target Russia with sanctions immediately but that eased after he has given another 50 days.
The fears about an imminent additional tightness in the market have dissipated.
Mr Trump told reporters on Monday that he was disappointed in Russian President Vladimir Putin and that US weapons would go to Ukraine.
This is as US lawmakers are preparing a bill that would authorise measures targeting other countries that buy Russian oil.
Since it attacked Ukraine in 2022, Western countries have cut most of their financial ties to Russia, but have held back from taking steps that would restrict Russia from selling its oil elsewhere. That has allowed Russia to continue earning hundreds of billions of Dollars from shipping oil to buyers such as China and India.
Meanwhile, President Trump has imposed a 30 per cent tariff on most imports from the European Union and Mexico from August 1, adding to similar warnings for other countries.
Tariffs raise the risk of slower economic growth, which could reduce global fuel demand and drag oil prices lower.
Also, Brazil is working to get the US to reverse the 50 per cent tariff it announced on all goods from that country.
Worries came as China’s economy slowed in the second quarter, data showed on Tuesday, with markets bracing for a weaker second half as exports lose momentum. China is the world’s largest oil importer.
Yet, oil demand is set to remain very strong through the third quarter of 2025, keeping the market balanced in the near term, the Secretary-General of the Organiation of the Petroleum Exporting Countries (OPEC), Mr Haitham Al Ghais said.
The American Petroleum Institute (API) estimated that crude oil inventories in the US rose sharply for the second week in a row, this time gaining an additional 19.10 million barrels in the week ending July 11.
Official data from the US Energy Information Administration (IEA) will be released later on Wednesday.