Oil prices have steadied following a significant drop, as investors await the implementation of increased US tariffs on India in response to its imports of Russian crude oil. Brent crude is trading near $US67 a barrel after a more than 2 per cent fall in the previous session, while West Texas Intermediate is just above $US63.
The US is doubling tariffs on select Indian goods to 50 per cent as a punitive measure for importing Russian oil. Despite the higher tariffs, which are scheduled to take effect, Indian processors reportedly intend to maintain the majority of their current purchasing levels. Concerns about global oil demand have grown as the US-led trade war has intensified.
Vandana Hari, founder of Vanda Insights, notes that she does not foresee major supply concerns. “There is no directive from the Indian government to halt Russian crude purchases, and there’s little point in Indian refiners making individual decisions to pare back as there is no clear indication that it would help New Delhi negotiate.”
Brent oil has decreased by about 10 per cent this year. Market watchers are concerned that a glut will form, including a forecast from the International Energy Agency for a record surplus next year. The US action against India is part of a broader effort to mediate an end to the war in Ukraine.
