Traders are closely monitoring the Russia-Ukraine conflict for potential disruptions to fuel supplies
Oil prices edged down on Tuesday, following a surge of nearly 2 percent in the previous session. Traders are closely monitoring developments in the Russia-Ukraine conflict for potential disruptions to regional fuel supplies.
Brent crude fell by 32 cents, or 0.48 percent, to $67.90 per barrel, while West Texas Intermediate (WTI) crude also decreased by 33 cents, or 0.5 percent, to $64.45 per barrel. Both contracts reached their highest levels in over two weeks on Monday, with WTI climbing above the 100-day moving average.
The oil rally on Monday was primarily fueled by concerns about supply disruptions following Ukraine’s strikes on Russian energy infrastructure, as traders anticipated additional U.S. sanctions on Russian oil. The attacks have hindered Moscow’s oil processing and exports, leading to gasoline shortages in certain regions of Russia. This escalation came in response to Moscow’s advances on the front lines and its relentless targeting of Ukraine’s gas and power facilities.
U.S. political landscape and its impact
U.S. President Donald Trump has reiterated his threat to impose sanctions on Russia if there is no progress toward a peace deal within the next two weeks. Traders will also be keeping an eye on the potential impact of looming U.S. tariffs against India for its ongoing purchase of Russian oil, according to Ole Hansen, head of commodity strategy at Saxo Bank.
Indian exporters are preparing for disruptions after a notification from U.S. Homeland Security confirmed that Washington will impose an additional 25 percent tariff on all Indian-origin goods starting Wednesday. This means that Indian exports will face U.S. duties of up to 50 percent—among the highest imposed by Washington—after Trump announced extra tariffs as a penalty for New Delhi’s increased purchases of Russian oil earlier in August.
Traders are awaiting U.S. inventory data from the American Petroleum Institute (API) later in the day, with expectations indicating a decline in crude and gasoline stocks but a possible increase in distillate inventories.
In addition to these dynamics, recent data highlighted that crude oil prices have fallen 3.34 percent over the past month and are down 14.63 percent compared to the same period last year. Brent crude prices have similarly decreased by 1.16 percent over the last month and by nearly 13 percent year-on-year, reflecting broader market pressures amid ongoing geopolitical tensions and economic concerns. The U.S. Energy Information Administration (EIA) forecasts U.S. crude oil production to average around 13.4 million barrels per day in 2025, which is maintaining significant supply levels despite disruptions in other regions.
Anticipation of U.S. inventory data
More detailed reports from the International Energy Agency (IEA) reveal that global oil supply is expected to rise more rapidly than initially anticipated this year and next, partly due to OPEC+ increasing output and non-OPEC supply growth. The IEA warns that supply growth is outpacing demand, with demand growth downwardly revised partly due to macroeconomic uncertainties and consumer confidence issues. This supply-demand imbalance has contributed to price weaknesses despite geopolitical tensions.
Russian fossil fuel export revenue continues to decline amid sanctions and market conditions. Analysis by the Centre for Research on Energy and Clean Air (CREA) reports that Russia’s fossil fuel revenues fell by 18 percent year-on-year in the second quarter of 2025, the lowest since the invasion of Ukraine. Despite increased export volumes compared to the previous quarter, revenue drops are linked to lower price realizations and sanction effects. Full enforcement of EU oil price caps could reduce Russian export revenues further, with proposals to lower the cap to $45 per barrel potentially slashing revenues by 28 percent in June 2025 alone. This reflects ongoing efforts by international actors to limit Russia’s oil income.
Read more: Crude oil prices climb to $67.86 amid supply concerns, attacks on Russian infrastructure
Future production forecasts
The U.S. administration’s tariff measures against India have also intensified. India faces a cumulative 50 percent tariff on exports to the U.S. following additional tariffs imposed in August 2025 due to its continued purchases of Russian oil. Indian exporters are already feeling these impacts, with disruption reported in trade flows and competitiveness challenges compared to other Asian exporters such as Vietnam and Bangladesh. The Indian government is taking measures to mitigate these effects while pursuing trade diversification policies.
Regarding U.S. petroleum inventories, recent API reports showed a larger than expected decline in crude oil stocks by 2.4 million barrels for the week ending August 15, 2025, exceeding forecasts. Gasoline inventories decreased as well, while distillate inventories saw increases, signaling shifts in product demand and consumption patterns in the U.S. market. This inventory data is closely watched by traders for signals about supply tightness or surplus in the domestic market.