Oil prices ticked up in early trading on Wednesday after rising more than 3% in the previous session as potential supply shortages came into focus after U.S. President Donald Trump gave Moscow an abbreviated deadline toward ending the war in Ukraine.
Brent crude futures rose 14 cents, or 0.19%, to $72.65 a barrel by 0048 GMT while U.S. West Texas Intermediate crude climbed 2 cents, or 0.03%, to $69.23 a barrel.
Both contracts had settled at their highest since June 20 on Tuesday.
On Tuesday, Trump said he would start imposing measures on Russia, including 100% secondary tariffs on its trading partners, if it did not make progress on ending the war within 10-12 days, moving up an earlier 50-day deadline.
“Effective secondary 100% tariffs would lead to a dramatic shift in the oil market. A number of key buyers of Russian oil would likely be reluctant to continue purchases, particularly large U.S. trading partners,” ING analysts said in a note.
“While this gives OPEC+ room to start unwinding additional tranches of supply cuts, it would still leave the market in deficit under a worst-case scenario.”
The U.S. had warned China, the largest buyer of Russian oil, that it could face huge tariffs if it continues buying, Treasury Secretary Scott Bessent told a news conference in Stockholm where the U.S. was holding trade talks with the EU.
JP Morgan analysts said in a note that while China was not likely to comply with U.S. sanctions, India has signaled it would do so, potentially putting 2.3 million barrels per day of Russian oil exports at risk.
The U.S. and EU averted a trade war with a deal that included 15% U.S. tariffs on European imports, easing concerns about the impact of trade tensions on economic growth and offering further support to oil prices.
In Venezuela, foreign partners of state oil company PDVSA are still waiting for authorisations from the U.S. to operate in the sanctioned country after talks on the subject last week, which could return some supply to the market, potentially easing pressure for prices to rise.
(Reporting by Colleen Howe; Editing by Muralikumar Anantharaman)