Global crude oil benchmarks extended their decline on Friday, with Brent crude falling below $66 per barrel and WTI crude slipping toward $63, as tariff and market sentiment weighed heavily on prices despite signs of a tighter supply environment.
Market Overview
As of today, Friday morning at exactly 8:30 AM WAT, Brent crude traded at $66.31 per barrel, down from Thursday’s close, while West Texas Intermediate (WTI) hovered at $63.79 per barrel. Murban crude also posted losses, trading at $68.57. Natural gas prices remained relatively stable at $3.065/MMBtu, edging down by just 0.07%.
This marks a dramatic weekly drop for oil futures, driven by a convergence of bearish factors including escalating U.S.–India trade tensions, potential shifts in U.S–Russia relations, and broader concerns over oversupply.
U.S.–India Tariff Escalation
Investor sentiment took a hit after President Donald Trump announced a 25% tariff on all Indian imports, in retaliation for New Delhi’s continued purchase of discounted Russian crude. The move potentially disrupts an estimated 3.5 million barrels per day (bpd) in trade flows, according to Wall Street energy analysts.
While higher tariffs might typically support prices by tightening supply, traders appear more focused on demand-side uncertainty and the potential for rerouted cargoes to create temporary gluts in other regions.
Geopolitical Uncertainty and U.S.–Russia Dynamics
According to ING analysts Warren Patterson and Ewa Manthey, speculation over a possible Trump–Putin meeting is further pressuring prices. Such talks could alter the scope of secondary sanctions on India, depending on diplomatic outcomes. Notably, the deadline for Trump’s Russia Ukraine peace deal framework expires today, leaving open the possibility of harsher U.S. sanctions on Moscow should talks collapse.
Indian Refiners Diversifying Supply
Amid tariff threats, Indian state-owned refiners have begun sourcing alternatives to Russian crude. Reuters reports that two major state companies have secured 22 million barrels from non-Russian suppliers for delivery in the coming months a move that could reshape Asia’s spot market dynamics.
China’s Import Trends
On the bullish side, China’s crude oil imports rose 11.5% year-on-year in July to an average of 11.2 million bpd, though this was 5.4% lower than June’s 12.14 million bpd, which had marked a near two-year high. The June surge was driven by post-maintenance restocking and opportunistic buying of sanctioned barrels at steep discounts by independent “teapot” refiners.
July figures show strong demand, but a month-on-month drop dims optimism as Beijing’s refineries prepare to normalise operations next quarter.
Supply Dynamics and OPEC+ Compliance
Despite the unwinding of OPEC+ production cuts, supply remains tighter than anticipated. Compliance has been uneven, with several members failing to restore output at pledged levels due to infrastructure and investment constraints. However, these supportive fundamentals have not been enough to counteract macroeconomic and policy-driven headwinds in the short term.
Analysts caution that unless the tariff overhang clears or geopolitical risk shifts in favour of supply disruption, Brent could test support around $65, while WTI may risk dipping toward the $62 range. Short-term price action is expected to remain volatile, with market participants closely monitoring diplomatic developments between Washington, New Delhi, and Moscow, as well as Chinese buying patterns heading into Q4.