Crude oil prices extended their losing streak from last month, opening lower today on expectations that the Friday meeting between the presidents of Russia and the United States would yield a deal resulting in more oil supply.
At the time of writing, Brent crude was trading at $66.24 per barrel, with West Texas Intermediate at $63.43 per barrel, after booking a drop of some 4% last week, after the deadline President Trump had set for Russia to end the war in the Ukraine passed and no stricter sanctions were effected as threatened, ING’s commodity analysts said.
Russia’s demands include the Ukrainian government ceding eastern provinces, which it has indicated it would not agree to, and this casts doubts over the success of the Trump-Putin talks, Warren Patterson and Ewa Manthey noted.
“If we do see some level of de-escalation, it would remove sanction risk from the oil market. This would likely drive prices lower, given the bearish fundamentals,” the analysts added.
Bloomberg cited unnamed sources as saying the deal would indeed likely include recognizing the Donbass as Russian and the U.S. side was working to convince the Ukrainians and their European backers to accept it. This, however, was unlikely, the Bloomberg sources said, making any successful deal to end the hostilities highly uncertain. This, in turn, means the upside potential for oil prices remains rather intact.
“If peace talks falter and the conflict drags on, the market could quickly pivot to a bullish stance, potentially triggering a sharp rally in oil prices,” Reuters quoted the founder of Indian research firm SS WealthStreet, Sugandha Sachdeva, as saying.
Meanwhile, Trump’s tariffs on a host of trade partners continue to pressure oil prices due to their expected negative effect on overall economic activity in much of the world, according to analysts.
By Irina Slav for Oilprice.com
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