Oil prices continued to fall for the second consecutive session as global markets expressed skepticism over US President Donald Trump’s newly announced threat to impose 100% tariffs on Russian energy exports. The measures, intended to pressure Moscow over the ongoing war in Ukraine, have so far failed to convince traders that they’ll create a meaningful supply constraint. Instead, investors are laser-focused on real-time data, market fundamentals, and short-term demand signals from major consumers such as China and India.
A Second Session of Decline — Market Scepticism Grows
Benchmark Brent crude futures dropped below $69 a barrel after losing 1.6% on Monday. The most recent pressure point: Trump’s pledge of a 100% tariff on Russian oil, gas, and refined products if hostilities in Ukraine do not cease within 50 days. Although the rhetoric is strong, markets view this as a “secondary sanction”—targeting not only Russia but third countries such as India and China, which remain critical lifelines for Russian crude exports.
According to Matt Whitaker, US ambassador to NATO, the intended secondary sanctions would impact any country importing Russian oil, reshaping global flows. However, analysts like Giovanni Staunovo from UBS stress that the threat’s delayed nature—providing Russia a 50-day grace period—means there’s no immediate supply tightening, contributing to modest downward pressure on prices.
India and China: Anchors for Russian Oil
Since Moscow’s 2022 invasion of Ukraine, India and China have emerged as major buyers of Russian crude. Indian refiners, taking advantage of steep discounts, have increased their intake, while China continues to serve as both a diplomatic and economic bulwark for Moscow, with state-owned refineries ramping up imports.
This redistribution of global oil flows has allowed Russia to maintain significant export volumes even under Western sanctions. As a result, Trump’s new threats are unlikely to dramatically reduce Russian oil supply in the global market—at least in the short term.
Global Supply Dynamics: OPEC+ and Inventory Shifts
The downward trajectory in oil this year—Brent is down about 8% so far—can be attributed to a stew of factors. Persistent trade tensions, Trump’s aggressive posturing on tariffs, and strategic moves by OPEC+ to cap supply have all contributed. Yet global production still threatens to outstrip demand.
Paradoxically, some market metrics suggest underlying support. The front-month Brent contract currently trades at a $1+ premium over the next month, indicating robust immediate demand and limited availability.
Goldman Sachs Upgrades Short-Term Forecast
Goldman Sachs has raised its H2 2025 outlook for Brent by 5,forecastingaveragepricesat5, forecasting average prices at 5,forecastingaveragepricesat66 per barrel. The key drivers: lower-than-expected stockpiles in developed markets, particularly the US and within the diesel segment. However, the bank cautions on the longer-term outlook, maintaining a $56/barrel forecast for 2026, and warning that prices are likely to “decline substantially” in the coming years if supply outpaces demand.
Demand Resilience in Asia — China’s Refineries Take the Spotlight
Asia appears to be a bright spot for oil bulls: China, the world’s largest oil importer, reported that refinery throughput jumped to 15.2 million barrels per day in June, the highest since September 2023. This uptick in crude processing underlines robust demand for energy—even as global economic uncertainty lingers.
China’s ongoing strength in refining not only supports oil prices but also offsets some of the bearish sentiment stemming from Western markets. Nevertheless, should China’s economic momentum wane or OPEC+ adjust its policies, the fragile balance in global energy markets could tilt swiftly.
iX Deep: The Geopolitical Clock is Ticking
The current 50-day timeline set by the US adds a looming headline risk for oil and currency markets. While there is no immediate interruption to Russian exports, the deadline could trigger significant volatility if secondary sanctions are actually imposed on India, China, or other buyers. Watch for:
- Currency Markets: Heightened ruble (RUB) volatility and defensive posturing from oil-linked currencies should enforcement ramp up.
- Commodity Markets: Short-term support exists, but any headline out of OPEC+ or surprise from Asian demand could change market psychology quickly.
- Volatility Alert: Expect increased swings in oil, EM currencies, and even crypto markets as the deadline nears.
Conclusion: A Market on Edge, Watching the Calendar
Oil prices are wobbling in the shadow of tough rhetoric, uneven supply discipline, and a complex demand patchwork. The real test for energy — and for global risk sentiment — will be how markets react as Trump’s 50-day deadline draws closer. Until then, traders will look to China’s demand pulse, OPEC+ headlines, and the resilience of Russian flows for cues.
