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Crude stalls after 1% drop as market weighs US tariffs, risk premium - Aug. 1, 2025
Trump's torrent of tariffs and sanctions disorients oil market - Aug. 1, 2025
Markets are grappling with a cascade of disruptive moves by US President Donald Trump, whose newly imposed tariffs, sanctions, and looming ultimatum to Russia are reshaping near-term oil sentiment.
With a hard August 7 deadline set for President Putin to agree to a Ukraine ceasefire or face further sanctions, crude markets have priced in a $5/bbl risk premium, reflecting the threat of disruptions to Russia’s oil exports. We assess Trump’s policy options — including secondary tariffs and expanded sanctions — and their potential market impact.
India, the second-largest buyer of Russian crude, has been publicly called out by Trump and could be the first test case if Washington pursues punitive secondary tariffs. We explore New Delhi’s possible responses, supply alternatives, and the geopolitical risks ahead.
Meanwhile, private refiner Nayara Energy, part-owned by Rosneft, has been pulled into the fray following its blacklisting under the EU’s latest sanctions, with ripple effects already evident in its product exports activity.
Also in this issue: OPEC+’s final production target hike, Iran sanctions ripple into India’s methanol trade, and why the Fed’s hawkish tone and mixed macro data continue to weigh on broader risk sentiment.
Jul 2025: Mildly bearish near-term, neutral H2 July - July 3, 2025
📉 Near-term sentiment (next week): Mildly bearish.
Brent's knee-jerk rally on Iran halting IAEA cooperation looks overdone. The market has seen this movie before — unless tensions escalate sharply, the geopolitical risk premium is likely to fade as quickly as it flared. With no real threat to Mideast oil supply, traders may unwind gains and return to rangebound trading. Traders likely built precautionary long positions ahead of the long US July 4 weekend, but we expect unwinding to set in next week, if not by tomorrow.
⚖️ Rest of July: Neutral overall.
We expect a balancing act: seasonal demand and low US stock levels may offer price support, but there are no strong bullish drivers. On the flip side, sluggish macro indicators, a weak recovery in business activity post-tariff disruptions, and the continued unwinding of OPEC+ cuts lean bearish.
Trump's Iran attack jolts markets but worst-case scenarios capped - June 22, 2025
Mideast tensions surged after the US hit Iran’s three main nuclear sites in a pre-dawn strike Sunday, marking a sharp reversal from President Trump’s earlier two-week diplomatic window.
Brent could briefly jump above $80/bbl at Monday’s open, but a quick pullback is likely as markets reassess the escalation risk.
Despite fiery rhetoric, Iran’s actual response appears measured. We do not expect a near-term blockade of Hormuz or strikes on Gulf producers’ oil assets, keeping worst-case risks contained.
Trump’s “one-and-done” signal and Tehran’s continued openness to talks raise the odds of resumed nuclear negotiations — potentially easing the $12–14/bbl risk premium, though volatility will stay elevated.
OIL IN 2025: Softer crude prices but not because of oversupply - Dec. 27, 2024
Benchmark Brent crude prices averaged just under $80/barrel in 2024, about 2.7% lower versus last year.
We expect the average to dip into the $70-75/barrel band in 2025, but not because of a sizeable oversupply in the market, let alone a “glut”.
A sombre economic outlook for 2025, bolstered by China’s uphill battle to jump-start growth and amplified by expectations of a fresh round of trade wars under Trump 2.0, has shaped a bearish narrative around oil demand.
But we would caution against leaning too much into the gloom-and-doom scenario.
Crude is more likely to come under pressure from an evaporating geopolitical risk premium and worries over economic stability than any severe economic downturns or recessions.
Oil demand could remain relatively resilient, helped by softer prices, leading to a largely balanced market, especially with OPEC+ remaining extra cautious and conservative in bringing back the barrels it has locked away.
What challenges our baseline views? We also bring you the contrarian perspective and wildcards!
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