Oil Price News: Will Trump Back Down on Russian Sanctions?

The game of empires continues to bring Russia .ie ‘The Heartland’ to heal. Using the stick rather than the carrot approach after the summit Putin and Trump were to hold in Budapest was cancelled. This is good gamesmanship and negotiation tactics from Trump. This style would not be seen typically by a run-of-the-mill diplomat, for fear of appearing too unilateral. Like him or hate him, this is strong, decisive political craft borrowed from the commercial world. If you are wrestling a tiger, you use the whip, not the words.

Russian oil production. Source: Trading Economics

Immediate reaction

Market Snapshot: Why Oil Jumped on Russia Sanctions

Globex open to close was a +7.8% move or $4.47 WTI. While a large move, it ran out of steam on Thursday/Friday. There are two main reasons for this.

WTI 30 Mins bar chart.

Sanctions vs. Supply Reality: Shadow Fleet, Soft Impact

The Taco– Trump always chickens out.
The market is yet to fully price in the immediate impact of these sanctions, given Trumps track record on such matters. The removal of Russian crude from the global market would be a $10+ move within 2 sessions, let alone 5 sessions. Russia’s exports — about 7.3 million barrels a day. That’s approx 7.3% of global supply.

Actual sanctions vs headline impact

These Iranian style sanctions act to essentially remove crude from the global market, cutting off essential state oil income. The actual effect of sanctions of this level can often be a strong headline, but a soft impact. Various methods are employed to deliver the oil via shadow methods. From tankers operating with trackers turned off to ships transferring loads to evade authorities. Couple this, with swing state producers stating they will make up any and all shortfalls if needs be.

Source: NewSquawk

The rally had its wings clipped on Thursday when the Kuwaiti oil minister came out with the above remarks. I took a small short position on the front at the time, yet the market was not ready to price the risk back out, and I flattened the position within 2hrs.

WTI. 30 mins bar chart.

India and China: The Demand Pivot That Sets the Front

Source: NewSquawk

The immediate impact is on the world’s largest buyers of Russian oil-India & China. Refineries in both nations were on notice when Britain sanctioned Russia over a week ago, and they are on firm directives now. Both governments are responding already, directing their refineries to stop buying and processing Russian oil. This then shifts focus to middle eastern producers. The OPEC strategy to raise production 2.5million bpd over the last 12 months, turns out to position them to fill the void. OPEC just shifted the front lines forward on their market share war. This of course will be at the expense of their Russian members’ income.

It is important to remember that China’s crude demand remains firm, having shifted from transportation to petrochemical feedstock. At the same time, global transportation demand for crude has shifted from the ‘western world’ to India. The point being that Indian crude demand is extremely significant and must be met. With this under consideration, if they cannot replace Russian crude fast, it will continue to act as a net upward price catalyst. This replacement outlook drives front price.

Venezuela Wildcard: Policy Moves and Price Implications

Fresh U.S. sanctions against Russia sent crude prices surging over 4%, though the rally quickly lost momentum as traders questioned Trump’s resolve and Kuwait’s oil minister poured cold water on the move. The sanctions carry more symbolic weight than real disruption, with Russia’s vast “shadow fleet” still moving barrels under the radar. Yet the announcement reshuffles global supply lines: India and China—Russia’s biggest buyers—are being forced to pivot toward Middle Eastern producers. OPEC, already ramping up output over the past year, is well positioned to fill the gap and reclaim market share.

Politically, Trump’s sanctions appear less an all-out strike and more a tactical lever in his broader negotiations with China. He’s likely to ease pressure once the headlines have served their purpose, avoiding an oil price spike that could reignite inflation and undermine U.S. economic goals. This is power politics by design—using the oil market as a diplomatic weapon while keeping the inflation genie in the bottle.

Adding to that, reports that Washington is preparing for potential intervention in Venezuela could prove net-bearish—a reminder that behind the political theater lies the world’s largest untapped oil reserve, waiting to re-enter the market.

Positioning Check: Specs Short into the Rip

We continue to be shut out of CFTC data. Thanks to Commodity Context using ICE EU data, we can see that Specs are now at all-time high short positioning since 2011. They are short into this rip. If we look at the technicals in the trade section below, I can see why.

Source: Commodity Context

Trade Setup: Levels, Bias, and Risk Triggers

Here in the technical section of the report, we can observe that regardless of the macro, we are in a downtrend on the weekly bar. Then look at the daily below. We are at the top of a pullback in a downtrend.

WT Futures-December. Weekly bars.

WTI Naked Futures-December. Daily bars.

So Tim, what’s the trade? I’m bearish. Last week’s close $61.50 is a level to observe. On balance, writing this at 7:40am GMT Monday, the electronic session is imbalanced down-see 30min chart below. This is not investment or trading advice.

There is a clear level at the Y-1 $61.11 that was lifted last week, then acted as clear support in the red circle last week. This was the signal that the Kuwaiti minister’s comments were doing very little to calm the market back down. Price moved up to test the MPVAL level, with the market blowing off a top here.

I’m off the desk today due to a bank holiday in Ireland. I think there is a massive amount of unsound retailer longs in this market, and I just don’t see the mega bull case should the Russian sanctions soften in the slightest. It is a thin floor for the bulls.

WTI Futures- December. 30mins.

Bottom Line:

Bulls have the wind at their backs for now, but I’m fading it. The rally rests on thin ground, and if WTI can’t hold the Y-1 level at $61.11, fresh lows on the year are likely. Positioning remains stretched, sentiment frothy, and Trump’s sanctions-driven spike looks more like headline heat than real demand.