Oil prices edged higher Wednesday, rebounding after sharp losses in the previous session, as traders weighed the impact of steep U.S. tariffs on India and weaker-than-expected declines in U.S. crude inventories.
At 08:50 ET (12:50 GMT), Brent Oil Futures expiring in October rose 0.3% to $66.88 per barrel and West Texas Intermediate (WTI) crude futures also gained 0.4% to $63.52 per barrel.
Both contracts declined more than 2% on Tuesday due to waning expectations of an imminent peace agreement between Russia and Ukraine.
Additional India tariffs take effect
The Trump administration has imposed an additional 25% tariff on Indian imports, doubling the total duty to 50%, as part of broader pressure aimed at curbing India’s ties with Russia amid the Ukraine war.
“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 noted.
“The market will be watching Russian oil flows to India closely going forward to gauge the impact, if any, of secondary tariffs,” analysts added.
The conflict in Ukraine remains the main driver of market sentiment. U.S. President Donald Trump has sought to position himself as a mediator, but last week warned he would impose fresh sanctions on Moscow if no progress was made toward a peace deal within two weeks.
U.S. crude stockpiles fall less than expected - API
Data from the American Petroleum Institute (API) on Tuesday showed U.S. crude inventories fell by 970,000 barrels in the week to Aug. 22, smaller than the 1.7 million barrel draw analysts had forecast.
Gasoline and distillate stocks 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 said.
Market participants now await official U.S. government inventory data from the Energy Information Administration later on Wednesday for confirmation of the demand picture.
Brent prices to decline over next two years - Goldman
Goldman Sachs expects Brent crude prices to decline sharply over the next two years, forecasting levels in the “low $50s by late 2026” as rising supply and stock builds weigh on the market.
The bank’s analysts said the projection stems from “our oil surplus forecast averaging 1.8mb/d in 2025Q4–2026Q4,” combined with the assumption that OECD commercial stocks will account for roughly one-third of global builds.
According to Goldman Sachs, its pricing framework shows that “an increase in OECD commercial stocks by 1 day of demand reduces the fair value of oil prices vs. long-dated prices … by just over $3/bbl.”
Goldman Sachs expects prices to stay near forwards in 2025 but fall below them in 2026 as OECD builds accelerate. Risks to the outlook include stronger-than-expected Chinese stockpiling or weaker Russian production.
The bank adds that a faster pace of Chinese inventory growth could lift Brent to $62 in 2026, compared with the baseline forecast.
Source :
https://www.investing.com/news/commodities-news/oil-prices-hold-sharp-losses-with-focus-on-secondary-india-tariffs-4211823
