Oil prices experienced an uptick on Wednesday following Israel’s assault on Hamas leadership in Qatar, alongside U.S. President Donald Trump’s call for Europe to implement tariffs on purchasers of Russian oil. However, a subdued market outlook limited the extent of these gains. Brent crude futures increased by 35 cents, representing a 0.53% rise, reaching $66.74 per barrel by 0033 GMT. Meanwhile, U.S. West Texas Intermediate crude futures saw an uptick of 36 cents, or 0.57%, bringing the price to $62.99 per barrel.
Prices had increased by 0.6% in the preceding trading session following Israel’s announcement of an attack on Hamas leadership in Doha. This action, as noted by Qatar’s prime minister, posed a risk of undermining peace negotiations between Hamas and Israel. The reaction of oil prices was perceived as somewhat constrained due to the prevailing weakness in the broader market. Both benchmarks experienced an increase of nearly 2% shortly following the attack; however, they subsequently declined after the U.S. communicated to Doha that such an event would not recur on its territory. The modest reaction in crude oil prices to this news, coupled with scepticism surrounding U.S. President Trump’s assertions about potentially increasing sanctions on Russian oil, renders crude oil susceptible to declining prices, noted Tony Sycamore.
Trump has called on the European Union to implement 100% tariffs on China and India as a means to exert pressure on Russian President Vladimir Putin, according to sources. China and India have emerged as significant purchasers of Russian oil, contributing to the financial stability of Russia following its invasion of Ukraine in 2022, notwithstanding the substantial sanctions imposed by the U.S. “The expansion of secondary tariffs to other major buyers such as China could disrupt Russian crude exports and tighten global supply, a bullish signal for oil prices,” analysts noted. “However, uncertainty persists regarding the extent of the administration’s actions, as assertive measures may clash with initiatives aimed at controlling inflation and could affect the Federal Reserve’s decisions on interest rate reductions.”
Market participants anticipate that the Federal Reserve will lower interest rates in its upcoming meeting, a move that is likely to stimulate economic activity and increase demand for oil. However, the underlying fundamentals continue to exhibit weakness. The U.S. Energy Information Administration has indicated that global crude prices are likely to face considerable downward pressure in the upcoming months due to increasing inventories, a consequence of OPEC+ raising production levels.