Oil: India's secondary tariffs come into effect this week - ING

Oil prices managed to finish last week higher, settling up almost 2.9% higher as enthusiasm over a potential Russia-Ukraine ceasefire wanes. Uncertainty prevails as US President Trump once again threatens to impose tougher sanctions on Russia unless there's a deal to end the war. Trump said there needs to be more clarity within roughly two weeks. However, the market may be reluctant to read too much into this latest threat, given the lack of action taken by the US administration against Russia following the Trump-Putin summit, ING's commodity analysts Warren Patterson and Ewa Manthey note.

Indian refiners show an increased interest in Russian Oil,

"In the near term, we may see the Oil market benefit following Fed Chair Jerome Powell's Jackson Hole speech, which was largely dovish and provided a boost to most risk assets. The market is pricing in more than an 85% probability that the Fed cuts interest rates by 25bp in September, up from around 72% ahead of Powell's speech."

"It's looking increasingly likely that secondary tariffs against India for their purchases of Russian Oil will go ahead on 27 August. There appears to be little progress in trade talks between India and the US, since the US announced the tariff earlier in the month. Furthermore, Indian refiners have been showing increased interest in Russian Oil, after state refiners initially paused purchases until there is clarity from the government. If India continues to buy Russian Oil despite the 25% secondary tariff, it does little to change the market outlook. Instead, it only confirms the bearish outlook for Oil prices."

"Speculators continue to reduce their net long in ICE Brent amid a bearish outlook. Speculators sold 23,852 lots over the last reporting week to leave them with a net long of 182,695 lots as of last Tuesday. The move was driven predominantly by longs liquidating. Meanwhile, speculators also sold 19,578 lots in NYMEX WTI, leaving them with a net long of 29,686 lots. This is the smallest position held in WTI since October 2008."