Oil Prices Remain Elevated as Traders Brace for Volatile Week
Oil prices held onto recent gains in early Asian trading on Wednesday, buoyed by a complex mix of geopolitical risks, tightening trade policies, and anticipation surrounding the U.S. Federal Reserve’s upcoming interest rate decision. After surging more than 3% on Tuesday, both major crude benchmarks saw modest gains in early Asian trade. At the time of writing, WTI crude was up slightly at $69.24 per barrel, while Brent crude also edged higher to $72.66 per barrel, marking their highest levels since June 22. The Tuesday rally was largely triggered by mounting pressure from the United States on Moscow to end the war in Ukraine, with former President Donald Trump issuing a shortened 10-12 day ultimatum for Russia to show meaningful progress or face new secondary sanctions. These measures would include 100% tariffs on trading partners continuing to import Russian oil, a move that ING analysts said “would lead to a dramatic shift in the oil market.” Such tariffs are expected to deter major importers like China and India. While China would be more likely to resist U.S. pressure, India has signaled its willingness to comply, potentially putting as much as 2.3 million barrels per day of Russian exports at risk. Simultaneously, the United States and European Union managed to avert a full-blown trade war with a deal that introduced 15% U.S. tariffs on certain EU imports, relieving some concerns over global economic growth and offering oil prices additional support. Meanwhile, in Venezuela, foreign oil partners are still waiting on U.S. approvals to resume sanctioned operations—a potential wildcard for global supply dynamics if those barrels re-enter the market. The latest American Petroleum Institute (API) data also cast a shadow over the recent rally. According to the API, U.S. crude inventories unexpectedly rose by 1.5 million barrels in the week ending July 25, against expectations for a 2.5 million-barrel draw. This surprise build suggests demand softness or refining bottlenecks in the world’s largest fuel consumer. The market now awaits official inventory data from the U.S. Energy Information Administration, due later today, for confirmation. Oil traders remain cautious ahead of the Federal Reserve’s interest rate decision later on Wednesday. While the Fed is widely expected to hold rates steady, the accompanying statement and economic projections could influence market sentiment and the U.S. dollar—an important factor for oil prices. A stronger dollar, which gained ahead of the Fed decision, tends to put downward pressure on crude by making it more expensive for foreign buyers. Other economic data due this week includes nonfarm payrolls on Friday, China’s PMI numbers on Thursday, and the Bank of Japan’s interest rate decision, all of which could influence global energy demand projections. Oil prices are set for another volatile week with geopolitical and economic catalysts sure to shift sentiment several times in the coming days.
Indian Gas Giant Seeks U.S. LNG Cargo Swap
State-controlled natural gas firm GAIL (India) is looking to swap six U.S.-origin LNG cargoes with six cargoes for delivery to India in a tender running until August 6, industry sources told Reuterson Tuesday. GAIL (India) is offering cargoes loading every other month in 2026, beginning in February and ending in December, on a free-on-board (FOB) basis from the U.S. export terminals at Sabine Pass or Cove Point, one of Reuters’ sources said. In exchange for these cargoes the Indian company is looking for six deliveries to India on a delivered ex-ship (DES) basis for the same months. GAIL, the biggest natural gas distributor in India, has also reportedly started discussions about buying LNG from the proposed $44-billion Alaska LNG project. The potential deal to purchase LNG from the project is part of India’s push to buy and pledge to buy increased volumes of U.S. energy products and thus reduce its trade surplus with America and avoid steep tariffs.
India’s Nayara Cuts Oil Refinery Run Rate After EU Sanctions
Nayara Energy is reducing run rates at its west India refinery as more domestic and global players spurn the refiner after EU imposed sanctions on the company. The 400,000 barrel-a-day Vadinar refinery is currently operating at about 70%-80%, said the people, who asked not to be named due to the sensitivity of the matter. Across India, processors typically run their plants at close to 100% of their nameplate capacity, or over.
India’s Russian oil worries
The European Union’s 18th sanctions package (July 2025) significantly tightens financing restrictions on Russian oil and other energy resources from Moscow. And no sooner were the sanctions made public, debates and discussions on what happens to a buyers like India have started. But India has now sturdily expanded its energy basket, while pushing for more green energy, though strategic storage capacity is still not enough to deal with long-term crises. On July 18, Randhir Jaiswal, Spokesperson of the Ministry of External Affairs, had tweeted “We have noted the latest sanctions announced by the European Union. India does not subscribe to any unilateral sanction measures. We are a responsible actor and remain fully committed to our legal obligations. “Government of India considers the provisions of energy security a responsibility of paramount importance to meet the basic needs of its citizens. We would stress that there should be no double standards especially when it comes to energy trade.” The latest EU sanctions package aims to tighten the pressure on Russia’s oil revenues by lowering the price cap on Russian crude from $60 to $47.6 per barrel — now pegged at 15 per cent below the global average and reviewed every six months, according to Umud Shokri, Energy Strategist and Senior Foreign Policy Advisor. The sanctions also include refined petroleum products such as diesel and petrol that are processed from Russian crude — even if refined outside Russia, such as in India — and ban their entry into the EU. “Over 100 vessels from Russia’s shadow fleet have been blacklisted, and enforcement has intensified, making it harder to use intermediary countries or disguised shipping routes to bypass restrictions,” he said. For India, the most immediate impact is on private refiners, especially firms such as Nayara Energy that have strong Russian links. “India’s fuel exports to Europe — primarily diesel — have already declined, dropping from $19.2 billion in FY24 to $15 billion in FY25. Up to $5 billion more in exports are now at risk. While public sector refineries are not directly targeted in this round of sanctions, the increased scrutiny of supply chains and tighter compliance requirements may create future challenges, especially if enforcement extends to vessels or intermediaries involved in Russian-linked trade,” he said. “However, for the broader Indian economy and most domestic oil buyers, the practical effect remains limited. India continues to import discounted Russian crude, which supports domestic energy needs and cushions inflation. Moreover, Indian refiners can reroute some exports to Asia or Africa, albeit with lower profit margins and higher transport costs,” he said adding “So while the new EU measures don’t disrupt India’s energy security or overall trade posture for now, they do signal a growing risk environment for Indian exporters tied to Russian oil, with future rounds of enforcement potentially carrying broader consequences.” Finance factor Even if logistics is worked out how will Indian refiners get the finance for trading with Russia as the sanctions extend beyond traditional financial channels? “…EU and G7 entities are now banned from providing financing, insurance, shipping, brokering, or technical support for Russian crude or petroleum products sold above the $47.6/barrel price cap — regardless of destination. The package also imposes full transaction bans on a broader list of Russian banks and refiners, including those linked to shadow fleets and third-country intermediaries. Newly added asset freeze measures block access to EU financial services and markets for targeted firms with no wind-down periods,” he said. “This aims to disrupt layered or disguised financing structures. The European Commission has also mandated stricter enforcement through price cap audits, regular reviews, and closer monitoring of circumvention tactics like falsified attestations or fraudulent paperwork,” he said. “In practice, this forces mainstream EU/G7 banks and insurers to withdraw entirely from high-risk Russian oil transactions. Blacklisted firms lose access to EU capital, trade finance, and settlement systems,” he added. He agreed that while countries like India may still import Russian oil using non-Western channels, reliance on Western insurers or shipping services may expose them to secondary sanctions or operational disruptions. “These measures significantly restrict Russia’s ability to access global finance for oil exports while raising compliance burdens worldwide,” he said.