Oil Market Stay Cautious

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Oil Market Stay Cautious

Oil Market Adopts Cautious Stance

senior commodity analyst from Commerzbank believes that the oil market is likely waiting for a fresh catalyst. That's why the price action in the oil market remains subdued.

The US inventory report also shows that the crude oil stocks have gone through a sharp decline. Normally, this should support the oil prices, but the market players are looking elsewhere.

Oil Markets Face Sanction Risks

It seems that the biggest catalyst for the oil market is how the US will proceed with its tariff policy and actions. On the other hand, India has announced that it will buy oil from other sources if sanctions are imposed on Russia.

The two sources from which India could procure oil include Venezuela and Iran. But, these countries are also at risk of more sanctions from the USA.

One analyst added that India has already lowered its oil purchases from Russia since the Ukraine conflict. That's why the country is only buying around 1.5 million barrels/day from Russia.

In addition, it seems all the other big buyers are already looking for new supply sources. But despite all the actions, Russia is still exporting 7.2 million barrels/day, which is quite a lot.

According to Commerzbank, the new sanctions from the US president will not be as harsh as the markets are anticipating. So, there's a chance that Russia will continue to supply oil to the market.

So if that turns out to be true, the oil market will not experience a price shock. So, we can expect the oil prices to remain the same as long as the sanctions are not too harsh.

But what happens if the USA puts harsh sanctions on Russia and a few other oil-producing countries? The most natural reaction would be increased prices of crude oil & other gasoline products.

For now, it seems that the markets are waiting on how the USA will proceed with its tariff and sanctions policy.

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