Brent crude futures settled down 50 cents, or 0.7%, at US$68.71 a barrel. US West Texas Intermediate crude futures were down 46 cents, or 0.7%, at US$66.52.
NEW YORK: Oil prices dropped by less than 1% on Tuesday after US President Donald Trump's 50-day deadline for Russia to end the war in Ukraine and avoid sanctions eased concerns about any immediate supply disruption.
Brent crude futures settled down 50 cents, or 0.7%, at US$68.71 a barrel. US West Texas Intermediate crude futures were down 46 cents, or 0.7%, at US$66.52.
"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 UBS commodities analyst Giovanni Staunovo. "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.
In the event the proposed sanctions are implemented, "it would drastically change the outlook for the oil market," analysts at ING said in a note.
"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 US," ING said.
Trump announced new weapons for Ukraine on Monday and had said on Saturday that 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 raise the risk of slower economic growth, which could reduce global fuel demand and drag oil prices lower.
Also on the tariff front, Brazil will work to get the US to reverse "as quickly as possible" the 50% tariff it announced on all goods from that country, but does not rule out asking for more time to negotiate, Vice President Geraldo Alckmin said.
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 because of strong fiscal support and the frontloading of production and exports to beat US tariffs.
"The Chinese economic data was supportive overnight," said Phil Flynn, senior analyst with Price Futures Group. Elsewhere, oil demand is set to remain "very strong" through the third quarter, keeping the market balanced in the near term, the Organization of the Petroleum Exporting Countries' secretary general said, according to a Russian media report.
In US supply, US crude stocks rose by 839,000 barrels last week, market sources said, citing American Petroleum Institute figures on Tuesday.
US government data on stockpiles is due on Wednesday. — Reuters
