Oil prices surged by more than 1% on Tuesday, July 30, as geopolitical tensions between the U.S. and Russia intensified. Investors shifted their focus from mixed oil inventory data in the U.S. to Washington’s latest hardline approach, which could disrupt global energy flows.
At market close, Brent crude futures rose by 73 cents (1.01%) to $73.24 per barrel, while West Texas Intermediate (WTI) gained 79 cents (1.14%) to settle at $70 per barrel. Both benchmarks initially dropped nearly 1% earlier in the session before rebounding on geopolitical concerns.
On July 29, President Donald Trump announced that the U.S. would impose secondary sanctions, including a 100% tariff on Russia's trading partners, if Moscow fails to make meaningful progress in ending the war in Ukraine within 10 to 12 days. This sharply shortens the previous 50-day grace period.
In addition, a 25% tariff on Indian imports will take effect starting August 1, along with undisclosed penalties targeting countries that continue purchasing Russian oil and weapons.
China — Russia’s top oil customer — has been warned it could face “massive tariffs” if it doesn’t scale back its energy trade with Russia. While Beijing has not issued a formal response, India has signaled potential compliance, according to analysts at JP Morgan. This could jeopardize up to 2.3 million barrels per day of Russian crude exports, significantly tightening global supply.
According to the U.S. Energy Information Administration (EIA), crude oil inventories unexpectedly surged by 7.7 million barrels, defying analysts' forecasts for a 1.3 million-barrel drop.
Gasoline stockpiles fell by 2.7 million barrels — far more than the expected 0.6 million-barrel decline — while distillate inventories (such as diesel and heating oil) rose by 3.6 million barrels, also outpacing the estimated 0.3 million-barrel increase.
These mixed signals suggest an uncertain supply-demand balance in the U.S. energy market, leaving traders cautious about making bold short-term moves.
The U.S. economy posted a stronger-than-expected rebound in Q2 2025. However, economists cautioned that the headline figure overstates the economy’s health, as most of the growth was driven by a sharp drop in imports rather than robust domestic demand. In fact, consumer spending rose at its slowest pace in over two and a half years.
Despite political pressure from President Trump to lower interest rates, the Federal Reserve opted to hold rates steady during its policy meeting on the same day.
The recent oil price surge appears to be largely fueled by geopolitical tensions and U.S. sanctions rhetoric, rather than fundamental shifts in demand and supply. If Trump's threats materialize into active sanctions and more nations comply with U.S. demands, a significant disruption in global oil supply could drive prices higher in the short term.
However, with inventory data pointing both ways and economic uncertainty looming, investors should stay vigilant. Keeping an eye on crude stock trends, consumer sentiment, and future Fed rate decisions will be key to navigating the volatile energy landscape ahead.
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