Oil prices rise from five-week low on supply fears

August 6, 2025 (MLN): Oil prices rose on Wednesday, recovering from a five-week low recorded a day earlier, amid fears of potential supply disruptions following U.S. President Donald Trump's threat to impose tariffs on India in response to its continued imports of Russian crude.

Brent crude futures decreased by $1.02 or 1.51%, to $68.66 per barrel.

West Texas Intermediate (WTI) crude futures fall by $1.07, or 1.57%, to $66.18 per barrel by [4:55 pm] PST.

Oil prices dropped by over $1 on Tuesday, closing at their lowest level in five weeks and marking a fourth consecutive day of declines.

The slump was driven by concerns of oversupply following OPEC+’s decision to raise output in September.

"Investors are weighing the possibility that India may scale back its Russian crude imports in response to Trump’s tariff threats, which could tighten global supply. However, it's still unclear whether India will make such a move," said Yuki Takashima, an economist at Nomura Securities.

Takashima added that if India continues its current level of imports, West Texas Intermediate (WTI) prices are likely to remain within the $60–$70 range through the end of the month.

OPEC+, which includes the Organization of the Petroleum Exporting Countries and its allies, agreed on Sunday to increase production by 547,000 barrels per day in September.

This move will end their latest round of output cuts earlier than initially planned.

The alliance, which produces about half of the world’s oil, has been reducing supply for several years to stabilize the market.

However, it has recently adopted more aggressive production hikes in an effort to reclaim lost market share.

Meanwhile, U.S. pressure on India to curb Russian oil purchases as Washington seeks to compel Moscow toward a peace deal in Ukraine may disrupt established supply routes.

Indian refiners might seek alternative sources, while Russian crude could shift to other markets.

On Tuesday, Trump renewed his threat to impose steeper tariffs on Indian imports within 24 hours, citing New Delhi’s continued buying of Russian oil.

He also suggested that falling energy prices might force Russian President Vladimir Putin to end the conflict in Ukraine.

India dismissed Trump’s warning as “unjustified” and pledged to safeguard its economic interests, further straining trade relations between the two countries.

Takashima also highlighted that recent industry data supports the oil market, pointing to a significant drawdown in U.S. crude inventories.

According to sources citing American Petroleum Institute data, U.S. crude stocks fell by 4.2 million barrels last week far exceeding the 600,000-barrel decline expected in a Reuters poll for the week ending August 1.

The U.S. Energy Information Administration is scheduled to publish official inventory figures on Wednesday.

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