LONDON: Oil prices fell on Tuesday after surging nearly 2 percent in the previous session as traders monitor developments surrounding the war in Ukraine and potential disruption to Russian fuel supplies.
Brent crude was down 51 cents, or 0.7 percent, at $68.29 a barrel by 11:10 a.m. Saudi time, having hit its highest since early August in the previous session. West Texas Intermediate crude lost 57 cents, or about 0.9 percent, to $64.23.
“The modest setback today is due to risk aversion, with equity markets trading lower,” said UBS analyst Giovanni Staunovo. “Geopolitical factors are something to watch for, particularly what Trump might do if there is no meeting between Russia and Ukraine.”
Oil’s rally on Monday was primarily driven by supply risks after Ukraine strikes on Russian energy infrastructure and the possibility of further US sanctions on Russian oil.
Ukraine’s attacks in response to Russia’s advances in the conflict and its pounding of Ukrainian gas and power facilities have disrupted Moscow’s oil processing and exports and created gasoline shortages in some parts of Russia.
US President Donald Trump, meanwhile, has renewed his threat to impose sanctions on Russia if there is no progress toward a peace deal in the next two weeks.
However, sources have told Reuters that US and Russian government officials discussed several energy deals on the sidelines of this month’s negotiations seeking peace in Ukraine.
“Given the huge amount of uncertainties in the oil market caused by the Ukrainian conflict and the tariff war, investors will remain unwilling to commit themselves to either direction on a prolonged basis,” said PVM Oil Associates analyst Tamas Varga.
In the medium term, Brent prices could be bound to a trading range of $65-$74 for the foreseeable future, he added.
Looming US tariffs against India over its continued purchases of Russian oil are also in focus, said Saxo Bank commodities strategist Ole Hansen. India is the third-largest buyer of Russian crude.
Indian exports could face US duties of up to 50 percent — among the highest imposed by Washington.
