Oil prices seesaw as Rubio questions potential Russia sanctions

Oil prices pared earlier gains and eased to fresh five-week lows after U.S. Secretary of State Marco Rubio indicated there would be an announcement later on Wednesday on whether potential sanctions against Russia over its war in Ukraine would proceed this week.

Brent crude futures were down 40 cents, or 0.59%, to $67.24 a barrel at 2:04 p.m. ET, while U.S. West Texas Intermediate (WTI) crude fell 51 cents, or 0.78%, to $64.65.

“We’ll have more to say about that later on today,” Rubio said when asked about the timing of the possible sanctions, adding that there would hopefully be some announcements soon.

“Maybe positive, maybe not.”

Russia, the second-biggest crude producer after the U.S., said U.S. envoy Steve Witkoff held “useful and constructive” talks with Russian President Vladimir Putin on Wednesday, two days before the expiration of a deadline set by President Donald Trump for Russia to agree to peace in Ukraine or face new sanctions.

Prices had risen earlier in the session on supply and demand worries after Trump issued an executive order imposing an additional 25% tariff on goods from India, saying it directly or indirectly imported Russian oil. India, along with China, is a major buyer of Russian oil.

A larger-than-expected U.S. crude storage draw last week also boosted prices.

Those moves marked a fifth consecutive day of losses for both crude benchmarks, with Brent on track for its lowest close since July 1 and WTI on track for its lowest close since June 24.

“Prices bounced up on the potential higher tariffs on India, but the market is waiting for some sort of a formal implementation as well as which elements in the market are to be affected,” said Janiv Shah, an analyst at Rystad Energy.

Shah said a planned supply increase from the OPEC+ group, which includes the Organization of the Petroleum Exporting Countries and allies like Russia, would offset a potential decline in Russian oil supply.

Indian Prime Minister Narendra Modi, meanwhile, will visit China for the first time in over seven years, a government source said on Wednesday, in a further sign of a diplomatic thaw with Beijing as tensions with the U.S. rise.

Oil markets also found support earlier in the day from a bigger-than-expected decline in U.S. crude inventories last week.

The U.S. Energy Information Administration said energy firms pulled 3.0 million barrels of crude from inventories during the week ended August 1. ,

That was much bigger than the 0.6-million barrel draw analysts forecast in a Reuters poll but was smaller than the decline of 4.2 million barrels that market sources said the American Petroleum Institute trade group cited in its figures on Tuesday.