Oil prices declined in Asian markets on Monday, continuing a downward trend following August losses, as investors appeared less concerned about immediate supply disruptions from potential secondary sanctions on Russian crude. Attention shifted instead to new Chinese factory data for indications of demand.
At 23:01 ET (03:01 GMT), Brent crude for October delivery fell 0.4% to $67.21 per barrel, while West Texas Intermediate (WTI) crude also declined 0.4%, settling at $63.78 per barrel. Both benchmarks recorded drops of more than 7% during August, pressured by concerns over oversupply amid steady OPEC+ production increases.
Market Shows Little Reaction to Russian Supply Sanction Risks
Hopes for a Russia-Ukraine peace deal have waned following U.S. President Donald Trump’s call last month for Ukrainian President Volodymyr Zelenskyy and Russian President Vladimir Putin to hold direct talks before considering a trilateral summit in Washington. Despite this, worries about potential sanctions on Russian oil buyers have eased.
“Oil prices settled lower last week despite growing European calls for secondary sanctions on buyers of Russian oil and gas. The mild reaction may suggest the market is becoming increasingly numb towards sanction risks,” ING analysts said in a note.
“And that to be effective, sanctions would likely need US backing. Up until now, the US has only imposed secondary tariffs on India for its purchases of Russian oil, not other key players like China,” they added.
In connection with India’s continued purchases of Russian crude, an additional 25% U.S. tariff on Indian imports came into effect last week, doubling the total duty to 50% as of August 27.
Traders Weigh Demand Outlook; China PMI in Focus
Seasonal trends are also under scrutiny, with U.S. fuel consumption expected to ease as the summer driving season winds down. Rising OPEC+ output in the coming months may increase supply further, potentially boosting inventories if economic growth remains slow.
Demand projections remain mixed following contrasting economic readings from China. The official manufacturing purchasing managers’ index (PMI) showed a contraction in August, while a private RatigDog survey indicated that factory activity rebounded at the fastest pace in five months.
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