Oil Prices Dip After Sharp Gains as Geopolitical Tensions Remain in Focus

Oil prices slipped on Tuesday, easing from the sharp rally seen a day earlier, as traders kept a close eye on the escalating Russia-Ukraine conflict and its potential impact on global fuel supplies.

Brent crude futures fell 32 cents, or 0.5 percent, to $68.48 a barrel at 7:48 a.m. Saudi time, while West Texas Intermediate (WTI) lost 33 cents, or 0.5 percent, to $64.47. Both benchmarks had surged nearly 2 percent on Monday, climbing to their highest levels in more than two weeks, with WTI briefly rising above its 100-day moving average.

Analysts said the near-term risks for crude prices remain skewed to the upside. “The risks for crude oil prices appear tilted toward further gains, particularly if the price sustains a move above the $64–$65 resistance level,” brokerage IG noted in a report.

Monday’s rally was largely fueled by concerns over supply disruptions after Ukraine struck Russian energy facilities, disrupting oil processing and exports. The attacks, seen as retaliation for Moscow’s intensified strikes on Ukraine’s gas and power infrastructure, have led to gasoline shortages in parts of Russia.

The geopolitical backdrop remains tense, with Washington signaling further measures against Moscow. US President Donald Trump warned that sanctions on Russia could be expanded if no progress is made toward a peace deal within the next two weeks. Barclays said in a client note that crude markets are likely to remain range-bound but volatile, supported by resilient demand fundamentals.

India has also been drawn into the fray. Traders are monitoring the fallout from looming US tariffs targeting Indian exports after New Delhi stepped up purchases of Russian oil. The US Department of Homeland Security confirmed that an additional 25 percent tariff will be imposed on all Indian-origin goods starting Wednesday, potentially raising total duties to as high as 50 percent. The move comes after Trump pledged punitive measures against India earlier in August, arguing that its continued imports of Russian crude undermine sanctions pressure on Moscow.

Indian exporters are bracing for significant disruption to trade flows with the US, one of their largest markets, while energy traders warn that the tariffs could complicate global crude trade dynamics.

Meanwhile, the market is awaiting fresh inventory data from the American Petroleum Institute later on Tuesday. Analysts expect a drawdown in US crude and gasoline stocks but anticipate a possible build in distillate inventories, which could influence short-term price direction.

Despite Tuesday’s decline, crude prices remain supported by geopolitical uncertainty and the risk of further supply shocks. Traders say the market could test higher levels if sanctions expand or if Russian energy infrastructure faces additional attacks in the coming weeks.