Oil prices slip as Trump’s 50-day Russia deadline cools supply fears

Oil prices fell on Tuesday as US President Donald Trump’s announcement of a 50-day deadline for Russia to end the Ukraine war eased immediate concerns about sanctions-related supply disruptions, giving markets a reprieve after recent volatility.

According to Reuters, Brent crude futures declined 29 cents, or 0.4 per cent, to $68.92 a barrel by 0342 GMT, while US West Texas Intermediate (WTI) crude futures dropped 35 cents, or 0.5 per cent, to $66.63. Both benchmarks had already fallen more than $1 in the previous session as traders digested Trump’s more measured timeline for potential sanctions.

Market relief after sanctions scare

Oil prices had surged initially on worries that new US sanctions would quickly disrupt Russian crude exports, but those gains evaporated after Trump set a relatively long 50-day window for Russia to withdraw its forces and avoid punitive measures.

“Trump’s milder stance on sanctions over Russian oil eased fears of a supply crunch while his tariff plan continues to mount economic pressures,” Priyanka Sachdeva, senior market analyst at Phillip Nova, told Reuters.

Analysts say the extended deadline gives Moscow a diplomatic off-ramp while giving global oil traders time to adjust. Traders are now debating whether the US will actually impose tough sanctions if the deadline passes without progress.

Potential for major market shift remains

Despite the near-term easing in prices, analysts warn that the risk of sanctions still looms large if Russia does not comply. “If Trump does follow through and the proposed sanctions are implemented, it would drastically change the outlook for the oil market,” ING analysts said in a note cited by Reuters.

Such measures would pose a stark dilemma for Russia’s biggest crude buyers like China, India, and Turkey, which would have to balance the benefits of cheap Russian oil against the cost of possible US penalties or tariffs on their exports.

Tariff threats and global demand worries

In addition to the Russia sanctions warning, President Trump has also escalated trade tensions on other fronts. On Saturday, he announced plans to impose a 30 per cent tariff on most imports from the European Union and Mexico from August 1, adding to earlier tariff threats targeting other countries.

As per Reuters, these trade measures risk slowing global economic growth, a factor that could dent oil demand and weigh on prices in the coming months. “Tariffs risk slowing down economic growth, which could sap global fuel demand and drag oil prices lower,” ING’s note added.

Supply outlook remains tight in near term

Despite these concerns, the underlying oil market remains relatively well-supported for now. According to Reuters, the Organization of the Petroleum Exporting Countries (OPEC) secretary general said oil demand is set to stay “very strong” through the third quarter, keeping the market snugly balanced in the short run.

Meanwhile, Goldman Sachs on Monday raised its oil price outlook for the second half of 2025. The bank cited potential supply disruptions, tightening inventories in Organisation for Economic Co-operation and Development (OECD) countries, and production constraints in Russia as factors that could support higher prices.