NEW YORK: Oil slid as traders weighed the outlook for a ceasefire in Ukraine, with President Donald Trump pushing for a summit between Vladimir Putin and Volodymyr Zelenskiy after a series of high-level talks.
West Texas Intermediate fell 1.7% to settle near US$62, while Brent dipped 1.2% to settle around US$66. Any eventual peace deal could pave the way for fewer restrictions on Russian crude exports, though Moscow has largely kept its oil flowing since the conflict began.
Trump called the Russian president and urged him to start making plans for a one-on-one meeting with Zelenskiy after discussions with the Ukrainian leader on Monday at the White House. The US president told Fox News on Tuesday that both Russia and Ukraine must show flexibility in any talks.
Oil is down more than 10% this year due to concerns about the fallout from US trade policies and the outlook for oversupply as Opec+ brings back barrels. Any impact from the talks on the Ukraine war is still uncertain, and Treasury Secretary Scott Bessent reiterated Tuesday that the US could increase tariffs on India because of its Russian oil purchases.
"The market, in my opinion, is pricing in that Russian sanctions will be easing somewhat, although of course anything can happen so it’s a slow pricing-in,” said Dennis Kissler, senior vice president for trading at BOK Financial Securities. "Still, it’s looking more favorable this week than it has in the past few weeks.”
Despite the diplomacy, attacks from both sides continue. Ukraine said it carried out a fresh strike on Russia’s Druzhba oil pipeline system on Monday, halting a conduit that’s important for crude supply to parts of central Europe. Ukraine said Russia hit a domestic oil refinery in the country overnight.
While crude prices have been largely sandwiched in a range as a result of thinner summer trading volumes and ongoing efforts to end the war, other market gauges have had a busier August.
On the US Gulf Coast, crude barrels are fetching some of their biggest premiums in months, in a sign that more supplies could be heading for export over the next few weeks. At the same time, the US benchmark is trading at its biggest discount relative to Brent since April, another factor that could boost overseas shipments. — Bloomberg
