Oil Prices Rise Amid Supply Disruption Fears Following Trump's Threats to India

Oil prices rose in trading on Wednesday, August 6, recovering from their lowest levels in five weeks recorded yesterday, amid market fears of potential disruptions in supply flow following U.S. President Donald Trump's threats to impose tariffs on India due to its continued purchase of Russian oil.

According to data, Brent crude futures rose by 0.6% to $68.06 a barrel, while West Texas Intermediate crude contracts increased by the same percentage to $65.57 a barrel. This rise came after both crude types fell by more than a dollar at the settlement of trades yesterday, reaching their lowest levels in five weeks, amid fears of a potential surplus in oil supply with the planned increase in production by the OPEC+ alliance in September.

In this context, Yuki Takashima, an economist at Nomura Securities, commented to Reuters: "Investors are currently assessing whether India will reduce its imports of Russian oil in response to Trump's threats, which could lead to a reduction in supply, but it remains unclear whether this will actually happen."

Takashima added: "If India's imports of Russian crude remain at current levels, West Texas Intermediate crude is likely to stay within a range of $60 to $70 for the rest of the month."

It is worth noting that the OPEC+ alliance, which includes the Organization of the Petroleum Exporting Countries (OPEC) and its allies, agreed last Sunday to increase its production by 547,000 barrels per day starting in September, thus ending previous reduction policies ahead of schedule. The alliance produces about half of the world's oil supply, after years of cutting production to support prices, before starting this year with rapid increases to regain its market share.

In a related context, Trump warned of higher tariffs on Indian goods if it does not stop buying Russian oil, in a move aimed, according to his statements, at increasing pressure on Russian President Vladimir Putin to end the war in Ukraine. For its part, the Indian government rejected these threats, describing them as "unjustified," affirming its determination to protect its economic interests.

Takashima also pointed to the decline in U.S. oil inventories as a supportive factor for prices, as data from the American Petroleum Institute showed a surprising drop of 4.2 million barrels last week, compared to Reuters' expectations of a decrease of only 600,000 barrels. The U.S. Energy Information Administration is expected to release its official report on inventories later today.

It should be noted that any reduction in Indian imports of Russian oil may push Indian refineries to seek alternatives, while Russian oil may be redirected to other buyers, which could affect the balance of the global market.