Oil Extends Drop as Traders Doubt Trump Threat to Russia Supply

(Bloomberg) — Oil declined for a second session as traders doubted that US President Donald Trump’s latest plan to pressure Russia over the war in Ukraine would end up posing a meaningful obstacle to Moscow’s energy exports.

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Brent crude fell below $69 a barrel after losing 1.6% on Monday. Trump boosted military support for Ukraine and threatened to impose 100% tariffs if the hostilities don’t end with a deal in 50 days. That effectively represents secondary sanctions on countries buying oil from Russia, according to Matt Whitaker, US ambassador to NATO, citing India and China.

“Expectation was something could happen immediately — now Russia got another 50 days, so no additional tightness,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. “That is what’s weighing modestly on prices.”

India became a significant consumer of Russian crude as flows were reshaped following Moscow’s 2022 invasion. China has been a diplomatic and economic lifeline for Russia, and its refiners also import the nation’s oil.

Global benchmark Brent has lost about 8% this year, hurt by the fallout from Trump’s trade war, as well as a drive by OPEC+ to restore curbed supplies. These headwinds have fanned concern output may run ahead of consumption, creating a glut, although current market metrics point to underlying support. Brent’s closest contract is trading at a premium of more than $1 per barrel over the following month, a sign of strong short-term demand.

Goldman Sachs Group Inc. raised its forecast for Brent this half by $5 to $66 a barrel, citing lower-than-expected stockpiles in developed nations, especially in the US and for diesel. The outlook for next year, however, was kept at $56. “We continue to think that oil prices are likely to decline substantially by 2026,” analysts including Daan Struyven said in a note.

In Asia, traders assessed a relatively strong showing from crude processors in China, the world’s largest oil importer. Refining throughput rose to more than 15.2 million barrels a day in June, the strongest pace since September 2023, according to Bloomberg calculations based on government figures. A gauge of apparent demand also improved.

“The China data was quite good for oil,” Staunovo said. “Strong refinery activity.”

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