Oil up as Russia deadline inches closer

Oil prices registered gains on Wednesday as traders waited to see if Russia evades punitive sanctions and other countries are spared secondary tariffs, with the deadline for Moscow to sign a peace deal fast approaching.

Brent Crude oil was priced at USD68.69 a barrel on Wednesday afternoon in London, up from USD68.04 at the same time on Tuesday. West Texas Intermediate rose to USD66.24 a barrel from USD65.60.

Traders were in wait-and-see mode on Wednesday as they waited for clarity on the possible additional US sanctions against the US, and the potential secondary tariffs on countries that buy crude oil from Russia.

US President Donald Trump has threatened Moscow with fresh sanctions unless it reaches a peace agreement with Ukraine by Friday this week.

"There's still plenty of uncertainty over the US imposing secondary tariffs on buyers of Russian oil," ING analysts Warren Patterson and Ewa Manthey said, with India being the key target of such duties.

"However, market chatter is growing that China's purchases of Russian oil may come into focus next," Patterson and Manthey said.

"If India were to stop buying Russian oil amid tariff threats, we believe the market would be able to cope with the loss of this supply," ING analysts said, adding: "It would wipe out the surplus we're expecting in the market through the latter part of this year and much of 2026."

This, they noted, would leave some upside to oil prices, but a "manageable" one.

The bigger risk is if other buyers also start to shun Russian oil, ING's Patterson and Manthey warned.

This would require Opec to tap into its spare production capacity "quickly and aggressively" to balance the market, they said.

But traders expects more production, for now. The eight Opec+ countries on Sunday said they will increase production by 547,000 barrels a day in September, as expected.

"We should get more clarity later this week, with President Trump's deadline for Russia to strike a deal with Ukraine on Friday," Patterson and Manthey said.

AFP reports that Trump on Tuesday announced a meeting between the US and Russia for Wednesday.