Trump's Sanctions Threats Weigh on Oil Prices as Global Supplies Come Under Scrutiny

Oil prices fell 1% on Monday as investors weighed US President Donald Trump's threat to impose sanctions on Russian oil buyers within 50 days. Trump also announced new weapons for Ukraine. The market initially rallied on expectations of steeper sanctions but retreated as the deadline was seen as further off. The EU and South Korea are working on trade deals with the US to soften the blow from looming tariffs.

Oil prices experienced a significant drop on Monday, with WTI crude prices declining by 1% to $64.27 a barrel [1]. This downturn was largely driven by investor concerns over U.S. President Donald Trump's threat to impose sanctions on Russian oil buyers within 50 days. The S&P 500 energy sector was the biggest loser of the day, falling by 1.1% [1].

Trump's announcement of new weapons for Ukraine also contributed to market volatility. The market initially rallied on expectations of steeper sanctions, but the deadline was seen as further off, leading to a retreat in prices. The EU and South Korea are working on trade deals with the U.S. to mitigate the impact of looming tariffs [3].

Benchmark Brent crude prices rose by 0.2% to $70.47 per barrel, while U.S. West Texas Intermediate crude prices gained 3 cents to $68.49 per barrel at 2.42 a.m. GMT [3]. The U.S. Oil Fund (USO) has gained marginally this year, while the SPDR S&P 500 ETF (SPY) has risen 5.8% [3].

Major energy stocks, including Haliburton, Schlumberger, Baker Hughes, Exxon Mobil, and Chevron, were down by 1% to 2% [1]. The energy sector's performance was closely watched as an indicator of the sector's overall health.

Investors remain cautious as they await further details on Trump's sanctions plan and the potential impact on global oil supplies. The International Energy Agency (IEA) reported that Saudi Arabia exceeded its oil output target for June by 430,000 barrels per day, offsetting some of the supply risks [3].

In other news, the EU is considering setting a lower price cap on Russian oil [3]. Retail sentiment about the United States Oil Fund (USO) remains in the 'extremely bearish' territory [3].

References:
[1] https://www.barrons.com/livecoverage/stock-market-news-today-071425/card/energy-is-taking-a-hit-today-oil-prices-are-lower--SDVE71iDTUyRbMCPnftG
[3] https://stocktwits.com/news-articles/markets/equity/oil-prices-edge-higher-as-trump-teases-russia-sanctions/ch8BjnnR5Nt