Oil prices add to recent gains on threat of Russian sanctions; Fed decision looms

Investing.com-- Oil prices edged higher Wednesday, with gains minor compared with the strong move higher in the prior session as the focus turned to potential sanctions on Russian crude.

At 09:05 ET (13:05 GMT), Brent oil futures for September rose 0.3% to $72.89 a barrel, while West Texas Intermediate crude futures rose 0.3% to $69.42 a barrel. 

Both benchmarks had settled on Tuesday at their highest since June 20, having surged more than 3%, in the wake of U.S. President Donald Trump announcing he would start imposing additional measures on Russia if it did not make progress on ending the war within 10 to 12 days, shortening the earlier 50-day deadline.

Trump threatens more Russian sanctions 

Trump had said on Tuesday that he would start imposing measures on Russia, such as secondary tariffs of 100% on trading partners, if it did not make progress on ending the war within 10 to 12 days, moving up from an earlier 50-day deadline.

The United States also warned China, the largest buyer of Russian oil, that it could face huge tariffs if it kept buying, Treasury Secretary Scott Bessent told a news conference in Stockholm.

"Russia exports more than 7m b/d of crude oil and refined products," said analysts at ING, in a note. "Thus, effective 100% secondary tariffs would lead to a dramatic shift in the oil market. A number of key buyers of Russian oil would likely be reluctant to continue purchases, particularly large US trading partners. The impact on the oil balance and prices would be significant."

However, Barclays (LON:BARC) has cautioned against searching for too much upside.

"We would caution against assigning too high of a probability to a sustained material disruption in Russian supplies at this time, given several considerations that could blunt the effect,” Barclays said.

"First, low energy prices are clearly a priority for the Trump administration. Second, Russia has been able to work around Western sanctions since the invasion, as the country’s exports have been resilient to the G-7 price cap mechanism. Third, secondary tariffs on Russian oil could jeopardize ongoing trade negotiations with China and India, two key buyers of Russian oil. Last, secondary tariffs announced on buyers of Venezuelan oil in March have had a negligible effect on the country’s exports so far. So the potential ’Sledgehammer’ might not affect oil markets materially."

U.S. GDP bounced back in Q2 

The crude market also received a minor boost Wednesday, after data showed that the U.S. economy, the largest energy consumer in the world, grew by more than anticipated in the second quarter, rebounding from a contraction in the first three months of 2025.

The Commerce Department’s advance gross domestic product (GDP) report on Wednesday showed growth of 3.0% for the April to June period, above the 2.5% growth expected. GDP shrank by 0.5% in the first quarter.

Additionally, headline personal consumption expenditures price index, a gauge of inflation, slowed to 2.1% from 3.7%. Excluding food and energy, the PCE index increased 2.5%, compared with an earlier jump of 3.5%.

The Federal Reserve is set to conclude its July policy meeting later in the session, and is widely expected to leave rates unchanged. particularly with the economy showing signs of resilience.

Officials at the Federal Reserve have been closely monitoring inflationary pressures as they deliberate over the path of interest rates in the coming months.

Nonfarm payrolls data, a key labor market indicator, is due on Friday.

Trump’s deadline for steep trade tariffs also lands on Friday, and the president announced on Wednesday that the United States will impose a 25% tariff plus penalties on India starting August 1, citing the country’s purchases of Russian military equipment and energy.

U.S. inventories unexpectedly rise - API 

Data from the American Petroleum Institute, released on Tuesday, showed U.S. oil inventories grew about 1.5 million barrels (mb) in the week to July 25.

This build contrasted expectations for a 2.5 mb draw, and also marked a reversal from a small draw in the prior week.

The API data usually heralds a similar reading from official inventory data, which is due later on Wednesday. Signs of a build in U.S. inventories raise some questions about demand in the world’s biggest fuel consumer, especially amid heightened economic uncertainty. 

China PMIs, BOJ meeting on tap

In Asia, focus is also on key purchasing managers index data from top oil importer China, due on Thursday. The print is expected to provide more insight into the world’s second-largest economy, after it wound down a bitter trade war with the U.S. earlier this year. 

The Bank of Japan is also set to decide on interest rates on Thursday, and is widely expected to leave them unchanged amid heightened uncertainty over trade and Japan’s political leadership.

Ambar Warrick contributed to this article