Oil prices fell on Tuesday after U.S. President Donald Trump's lengthy 50-day deadline for Russia to end the Ukraine war and avoid sanctions eased immediate supply concerns.
Brent crude futures fell 56 cents, or 0.8%, to $68.65 a barrel by 0736 GMT, while U.S. West Texas Intermediate crude futures fell 62 cents, or 0.9%, to $66.36.
"The focus has been on Donald Trump, there was some fear he might target Russia with sanctions immediately and now he has given another 50 days," said Giovanni Staunovo, commodity analyst at UBS. "Those fears about an imminent additional tightness in the market have dissipated. That's the main story."
Oil prices had climbed on the potential sanctions, but later gave up gains as the 50-day deadline raised hopes that sanctions could be avoided, and traders dwelled on whether the U.S. would actually impose steep tariffs on countries continuing to trade with Russia.
If Trump does follow through and the proposed sanctions are implemented, "it would drastically change the outlook for the oil market," analysts at ING said in a note on Tuesday.
"China, India and Turkey are the largest buyers of Russian crude oil. They would need to weigh the benefits of buying discounted Russian crude oil against the cost of their exports to the U.S.," the ING note said.
Trump announced new weapons for Ukraine on Monday, and had said on Saturday he would impose a 30% tariff on most imports from the European Union and Mexico from August 1, adding to similar warnings for other countries.
Tariffs risk slowing down economic growth, which could sap global fuel demand and drag oil prices lower.
China's economy slowed in the second quarter, data showed on Tuesday, with markets bracing for a weaker second half as exports lose momentum, prices continue to fall, and consumer confidence remains low.
Tony Sycamore, an analyst at IG, said economic growth in China came in above consensus largely due to strong fiscal support and the front loading of production and exports for the U.S. to beat tariffs.
"Economic data released today was concerning. Today's tepid Chinese data has direct implications for commodities including iron ore and crude oil," he said.
Elsewhere, oil demand is set to stay "very strong" through the third quarter, keeping the market balanced in the near term, the Organization of Petroleum Exporting Countries' secretary general said, according to a Russian media report. - Reuters
