Oil prices surged to a six-week high after former U.S. President Donald Trump threatened punitive trade measures against India for continuing to import crude oil and military equipment from Russia.
In a post on his Truth Social platform, Trump announced that his administration would impose 25% tariffs on Indian imports, along with an unspecified penalty for India’s continued dealings with Moscow. He accused India of undermining global efforts to isolate Russia over its ongoing war in Ukraine and criticized the country’s high tariff regime.
“India is a friend, but its tariffs are far too high—among the highest in the world,” Trump wrote. “They’re buying oil and weapons from Russia when everyone wants Russia to STOP THE KILLING IN UKRAINE.”
Trump said the measures would take effect from August 1, aligning with the U.S. deadline for concluding a new bilateral trade deal. In 2024, the United States recorded a $45.8 billion trade deficit with India.
In response, the Indian government reiterated its commitment to finalizing a “fair, balanced, and mutually beneficial bilateral trade agreement.”
The geopolitical tension pushed Brent crude to trade near $73 per barrel, up nearly 7% this week, while West Texas Intermediate (WTI) hovered just below $70.
Meanwhile, data from the U.S. Energy Information Administration (EIA) on Wednesday showed a surprise build-up in commercial crude inventories, which rose by 7.7 million barrels to 426.7 million barrels in the week ending July 25. Analysts had expected a drawdown of about 2.3 million barrels.
The EIA also reported:
- Strategic Petroleum Reserves rose by 200,000 barrels to 402.7 million barrels.
- Gasoline inventories declined by 2.7 million barrels to 228.4 million barrels.
- U.S. crude oil production increased by 41,000 barrels per day (bpd) to 13.31 million bpd.
- Crude imports rose by 159,000 bpd to 6.14 million bpd.
- Exports dropped by 1.16 million bpd to 2.7 million bpd.
According to the EIA’s latest Short-Term Energy Outlook, U.S. crude oil output is projected to average 13.37 million bpd in 2025.
The combination of geopolitical risk and shifting fundamentals in the U.S. oil market is likely to keep prices volatile in the near term, analysts said.
