Crude oil prices extended their Thursday gains earlier today, set for a weekly rise as the prospect of peace in the Ukraine dimmed amid seemingly incompatible demands from the warring parties.
At the time of writing, Brent crude was trading at $67.63 per barrel, with West Texas Intermediate at $63.51 per barrel, both slightly down from Thursday’s close but higher than they started the week.
Commodity analysts from ING said in a note earlier today that “The less likely a ceasefire looks, the more likely the risk of tougher sanctions.” This would be bullish for oil in the near term, especially after the entry into effect of U.S. secondary tariffs on India for its continued purchases of Russian oil.
“If tariffs push India away from buying Russian oil, and Russia can’t divert this supply to other buyers, domestic producers would be forced to reduce supply,” ING’s Warren Patterson and Ewa Manthey wrote. “However, this is less of a concern if India continues with its Russian crude purchases.”
When President Trump first threatened India with secondary tariffs, the government in New Delhi took a defiant stance but Indian refiners did reduce their purchases of Russian oil temporarily. Now, Indian state refiners have returned to the spot market for purchases of Russian oil as discounts for Moscow’s crude grades deepened to as much as $3 per barrel.
Earlier this week, reports emerged that Russia had proposed a “special mechanism” to India aiming to keep the oil trade going. Details of that special mechanism were not revealed but the Indian side also signaled it would keep buying Russian crude—as long as the price was right.
Buying Russian oil would continue “depending on the financial benefit,” India’s ambassador to Russia, Vinay Kumar, told Russia’s Investia daily. “India buys what is best for itself,” Kumar also said.
By Irina Slav for Oilprice.com
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