Oil prices were largely flat in Asian trade on Wednesday, following steep losses in the previous session, as investors assessed the effects of additional U.S. tariffs on India and a smaller-than-expected drop in U.S. crude inventories.
By 22:00 ET (02:00 GMT), October Brent futures edged down 0.1% to $67.16 per barrel, while WTI crude for the same month slipped 0.1% to $63.17 per barrel. Both contracts fell more than 2% on Tuesday, driven by diminishing hopes for a near-term Russia-Ukraine peace agreement.
New India Tariffs Take Effect
As part of Washington’s response to India’s ongoing purchases of Russian crude, an extra 25% tariff on Indian imports came into effect on August 27 at 12:01 a.m. ET, doubling the total levy to 50%. This measure is intended to pressure India over its energy ties with Russia amid the ongoing war in Ukraine.
“The secondary tariff has not been enough to stop India from buying Russian oil. Initially, secondary tariffs saw Indian refiners pause purchases. They have resumed purchases,” ING analysts said.
“The market will be watching Russian oil flows to India closely going forward to gauge the impact, if any, of secondary tariffs,” the analysts added.
The Ukraine conflict continues to dominate sentiment in energy markets. U.S. President Donald Trump has sought to present himself as a mediator but warned last week that he would implement new sanctions on Moscow if no progress toward a peace agreement occurs within two weeks.
U.S. Crude Inventories Drop Less Than Expected
Data from the American Petroleum Institute (API) on Tuesday indicated that U.S. crude inventories fell by 970,000 barrels in the week ending August 22, below analysts’ forecast of a 1.7 million-barrel decline. Gasoline and distillate inventories decreased by 2.1 million barrels and 1.5 million barrels, respectively.
“The draw in distillate stocks was slightly supportive for the middle distillate market, particularly given that we are in a period where stocks usually grow,” ING analysts noted.
Investors now look ahead to official inventory figures from the U.S. Energy Information Administration (EIA) later on Wednesday for a clearer picture of demand trends.
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