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Bloomberg: Oil Prices Fall After Trump's Statement On Sanctions Against Russia

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Bloomberg: Oil Prices Fall After Trump's Statement On Sanctions Against Russia

West Texas Intermediate fell below $67 a barrel.

United States President Donald Trump has announced plans to impose secondary sanctions against Russia. But his plan to pressure Moscow to end the war in Ukraine did not include measures to prevent exports from the aggressor country. Against this background, oil prices began to fall, writes Bloomberg.

For example, West Texas Intermediate fell 2.1%, dropping below $67 a barrel. The publication recalled that although Trump threatened 100% "secondary" duties on countries that do business with Russia if there is no ceasefire within 50 days, he did not talk about direct sanctions on Russian oil supplies. That said, traders assumed they would come when Trump announced a "major announcement" on Russia last week.

Secondary duties are difficult to enforce. Plus, investors don't really believe it will be implemented, says Rabobank global energy strategist Joe DeLaura. Notably, oil was up 1.8% before Trump unveiled his new plan against Russia.

"The only thing that would support this increase would be some sort of direct escalation by the U.S. against the Russian oil or gas industry," DeLaura added.

The reporters noted that Trump has also renewed the global trade war. Over the weekend, he threatened to impose 30 percent duties on goods from the European Union and Mexico. The announcement worsened the outlook for energy demand.

"In the short term, demand appears to be holding up. China ended the first half of the year with a record trade surplus, and factories managed to weather a roller coaster of tariff policies. Trade data also showed that crude oil imports rose this year. According to Vortexa data, the country significantly increased its purchases of Iranian crude in June," it said.

Other than that, oil is still more than 6 percent cheaper this year as traders and investors weigh geopolitical tensions in the Middle East that have raised supply concerns amid a U.S.-led trade war. OPEC+ is gradually easing restrictions on oil production. That could lead to a supply glut in the second half of the year.

"Traders are now focused on U.S. consumer price index data due Tuesday for clues on the way forward for monetary policy," Bloomberg states.

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