Oil prices are on a roller coaster, pay attention to marginal changes in multiple groups of events and US data!
2025-08-27 14:15:21
International oil prices fluctuated within a narrow range in early Asian trading on Wednesday (August 27). After a roller-coaster rally over the previous two trading days, both major international crude oil benchmarks saw significant declines on Tuesday. Brent crude futures settled down $1.58, or 2.3%, to $67.22 per barrel – having hit a new high since early August just on Monday. U.S. crude futures fell $1.55, or about 2.4%, to $63.25 per barrel on Tuesday. Oil prices had previously risen on Monday, August 25, due to supply-side risks. Supply disruptions caused by Ukrainian attacks on Russian energy infrastructure have boosted Russian crude oil exports. The ongoing Russia-Ukraine conflict, U.S. sanctions against Russia, and India's stance on Russian purchases are all shaping recent oil price trends. Traders should also monitor U.S. GDP data on Thursday and the PCE inflation report on Friday.
The key variables currently influencing oil prices are geopolitical conflict and trade policy, both of which indirectly impact the oil market through their impact on Russian oil exports. The drone attacks in Ukraine disrupted Russian refinery operations, reducing refinery processing rates and releasing more crude oil for export. The planned price increase affects the western ports of Primorsk, Novorossiysk, and Ust-Luga, which serve as key hubs for Russian crude oil exports to Europe and global markets.
The situation in Ukraine has a two-way impact on Russian oil supplies. On the one hand, Ukraine's ongoing attacks on Russian energy infrastructure (including refineries and pipelines) have significantly disrupted Russian oil processing and transportation. Since August, ten Russian refineries have been attacked, shutting at least 17% of the country's total processing capacity, or 1.1 million barrels per day (bpd). Russia has increased its August crude oil export plan from its three core western export ports of Primorsk, Novorossiysk, and Ust-Luga by 200,000 bpd, from an initial 1.8 million bpd to approximately 2 million bpd. The primary reason for this increase is that the Ukrainian drone attacks have reduced refinery processing capacity, freeing up more exportable crude oil.
In addition to tariffs on India, expectations of direct US sanctions against Russia are also impacting market sentiment. On August 26, US President Trump publicly stated that he was prepared to impose "very, very serious" economic sanctions on Russia if Russian President Vladimir Putin did not agree to a ceasefire in the Russia-Ukraine conflict. In response to a question about whether Putin would face consequences, Trump emphasized, "If I had to, I would be very, very serious about it, but I want to see it over. We have economic sanctions. I'm talking about economic sanctions because we're not going to get into a world war."
It's worth noting that in his recent efforts to end the Russia-Ukraine conflict, Trump shelved his threat of long-term sanctions against Putin. He is currently seeking to facilitate a one-on-one meeting between Ukrainian President Volodymyr Zelensky and Putin. Although Zelensky has agreed in principle, the Kremlin has made it clear that "there are no plans for such a meeting at this time." Trump further added at a White House cabinet meeting: "This won't be a world war, but it will be an economic war... An economic war would be terrible, and it would be bad for Russia, and I don't want that."
"Concerns that India may be subject to additional taxes on its purchases of Russian crude oil continue to hang over the market, leading to nervous investor sentiment," ANZ Bank said in a report released on Wednesday. Previously, after the United States announced additional tariffs and the European Union imposed stricter sanctions on Nayara Energy, an Indian refinery backed by Russia, refineries in India initially reduced their purchases of Russian crude oil.
However, according to company sources last week, Indian state-owned refiners Indian Oil Corporation and Bharat Petroleum Corporation have resumed purchasing Russian crude oil scheduled for September and October. Indian Oil Corporation, India's largest refiner, said it would continue to purchase Russian crude oil, but its purchases would be based primarily on economic feasibility.
This situation has led some analysts to question the extent to which the US tariff increase will affect India's purchases of Russian crude oil. Warren Patterson, head of commodities strategy at ING, said in a report, "The second round of tariffs is not yet sufficient to deter India from purchasing Russian oil." He added that the market will continue to closely monitor future flows of Russian crude oil to India to gauge the actual impact of the second round of tariffs.
Regarding the current oil market landscape, analysts generally believe that uncertainty is the dominant factor, a characteristic that will limit unilateral fluctuations in oil prices. PVMOil Associates analyst Tamas Varga explicitly stated, "Given the significant uncertainty created by the Ukrainian conflict and the tariff war in the oil market, investors will remain reluctant to commit to any single direction long-term." He further added that Brent crude oil prices are likely to remain in a trading range of $65-74 for the foreseeable future—a prediction that aligns closely with the current market environment, where bullish and bearish factors are intertwined.
Overall, traders are generally focused on Thursday's US GDP data and Friday's PCE inflation report. US monetary policy trends will determine the underlying tone of market investment. Also on this trading day is the release of the US EIA crude oil inventory data.
The current oil market is experiencing a balance of forces: On the one hand, Ukraine's ongoing attacks on Russian energy facilities, US sanctions against Russia, and increased tariffs on India all point to supply contraction risks, supporting oil prices. On the other hand, Russia's short-term increase in its August export plan, India's resumption of Russian crude oil purchases, and market wait-and-see attitudes regarding the pace of economic sanctions implementation are further limiting price gains. Technically, Brent crude oil is under pressure from the upper edge of the orange small box and the lower edge of the large red box near 66.80. Furthermore, it is under pressure from the 10-, 20-, and 30-day moving averages. Both the MACD and RISC indicate a bearish bias, leading to a volatile bearish pattern. The nearest resistance level is near 66.80. If it breaks below this level briefly and then recovers, 66.80 could become support. Current support is near the lower edge of the orange box at 65.50.
(Brent crude oil daily chart, source: Yihuitong)
At 14:13 Beijing time, Brent crude oil is currently trading at US$66.56 per barrel.
The situation of the Russia-Ukraine conflict has led Russia to increase its crude oil exports
The key variables currently influencing oil prices are geopolitical conflict and trade policy, both of which indirectly impact the oil market through their impact on Russian oil exports. The drone attacks in Ukraine disrupted Russian refinery operations, reducing refinery processing rates and releasing more crude oil for export. The planned price increase affects the western ports of Primorsk, Novorossiysk, and Ust-Luga, which serve as key hubs for Russian crude oil exports to Europe and global markets.
The situation in Ukraine has a two-way impact on Russian oil supplies. On the one hand, Ukraine's ongoing attacks on Russian energy infrastructure (including refineries and pipelines) have significantly disrupted Russian oil processing and transportation. Since August, ten Russian refineries have been attacked, shutting at least 17% of the country's total processing capacity, or 1.1 million barrels per day (bpd). Russia has increased its August crude oil export plan from its three core western export ports of Primorsk, Novorossiysk, and Ust-Luga by 200,000 bpd, from an initial 1.8 million bpd to approximately 2 million bpd. The primary reason for this increase is that the Ukrainian drone attacks have reduced refinery processing capacity, freeing up more exportable crude oil.
US says it's ready to impose 'very tough' economic sanctions on Russia
In addition to tariffs on India, expectations of direct US sanctions against Russia are also impacting market sentiment. On August 26, US President Trump publicly stated that he was prepared to impose "very, very serious" economic sanctions on Russia if Russian President Vladimir Putin did not agree to a ceasefire in the Russia-Ukraine conflict. In response to a question about whether Putin would face consequences, Trump emphasized, "If I had to, I would be very, very serious about it, but I want to see it over. We have economic sanctions. I'm talking about economic sanctions because we're not going to get into a world war."
It's worth noting that in his recent efforts to end the Russia-Ukraine conflict, Trump shelved his threat of long-term sanctions against Putin. He is currently seeking to facilitate a one-on-one meeting between Ukrainian President Volodymyr Zelensky and Putin. Although Zelensky has agreed in principle, the Kremlin has made it clear that "there are no plans for such a meeting at this time." Trump further added at a White House cabinet meeting: "This won't be a world war, but it will be an economic war... An economic war would be terrible, and it would be bad for Russia, and I don't want that."
India resumes crude oil purchases from Russia
"Concerns that India may be subject to additional taxes on its purchases of Russian crude oil continue to hang over the market, leading to nervous investor sentiment," ANZ Bank said in a report released on Wednesday. Previously, after the United States announced additional tariffs and the European Union imposed stricter sanctions on Nayara Energy, an Indian refinery backed by Russia, refineries in India initially reduced their purchases of Russian crude oil.
However, according to company sources last week, Indian state-owned refiners Indian Oil Corporation and Bharat Petroleum Corporation have resumed purchasing Russian crude oil scheduled for September and October. Indian Oil Corporation, India's largest refiner, said it would continue to purchase Russian crude oil, but its purchases would be based primarily on economic feasibility.
This situation has led some analysts to question the extent to which the US tariff increase will affect India's purchases of Russian crude oil. Warren Patterson, head of commodities strategy at ING, said in a report, "The second round of tariffs is not yet sufficient to deter India from purchasing Russian oil." He added that the market will continue to closely monitor future flows of Russian crude oil to India to gauge the actual impact of the second round of tariffs.
Analyst Views
Regarding the current oil market landscape, analysts generally believe that uncertainty is the dominant factor, a characteristic that will limit unilateral fluctuations in oil prices. PVMOil Associates analyst Tamas Varga explicitly stated, "Given the significant uncertainty created by the Ukrainian conflict and the tariff war in the oil market, investors will remain reluctant to commit to any single direction long-term." He further added that Brent crude oil prices are likely to remain in a trading range of $65-74 for the foreseeable future—a prediction that aligns closely with the current market environment, where bullish and bearish factors are intertwined.
Summarize:
Overall, traders are generally focused on Thursday's US GDP data and Friday's PCE inflation report. US monetary policy trends will determine the underlying tone of market investment. Also on this trading day is the release of the US EIA crude oil inventory data.
The current oil market is experiencing a balance of forces: On the one hand, Ukraine's ongoing attacks on Russian energy facilities, US sanctions against Russia, and increased tariffs on India all point to supply contraction risks, supporting oil prices. On the other hand, Russia's short-term increase in its August export plan, India's resumption of Russian crude oil purchases, and market wait-and-see attitudes regarding the pace of economic sanctions implementation are further limiting price gains. Technically, Brent crude oil is under pressure from the upper edge of the orange small box and the lower edge of the large red box near 66.80. Furthermore, it is under pressure from the 10-, 20-, and 30-day moving averages. Both the MACD and RISC indicate a bearish bias, leading to a volatile bearish pattern. The nearest resistance level is near 66.80. If it breaks below this level briefly and then recovers, 66.80 could become support. Current support is near the lower edge of the orange box at 65.50.
(Brent crude oil daily chart, source: Yihuitong)
At 14:13 Beijing time, Brent crude oil is currently trading at US$66.56 per barrel.
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- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
