Crude oil prices declined today after the end of the Trump-Zelensky talks on Monday, in anticipation of trilateral talks that could result in a peace deal. That would likely also result in the lifting of sanctions on Russian crude, making more of its available on global markets.
At the time of writing, Brent crude was trading at $66.20 per barrel and West Texas Intermediate was changing hands for $62.95 per barrel, after inching higher on Monday as the Ukrainian president arrived at the White House for talks with Trump.
“Betting markets aren’t overly convinced that we’ll see a ceasefire before the end of the year,” ING commodity analysts said in a note following the meeting. Indeed, the surrender of the Donbass, most of which is already under Russian control, remains a no-no for Zelensky, it appears, while it also remains a hard condition for Russia. This mars the prospect of peace quite considerably unless both sides are willing to make concessions.
“Polymarkets is showing a 38% chance of a ceasefire, well below the peak of 78% seen in March. The modest price action in the oil market this morning appears to fit with this view,” ING’s Warren Patterson and Ewa Manthey also wrote.
Another related issue is the additional tariff that President Trump said he would impose on India as punishment for its purchases of Russian crude. The tariff comes into effect at the end of August. This means that negotiators from the U.S., Russia, and Ukraine have little time to make a deal that would avoid considerable disruption on world oil markets.
An additional, if not too substantial, factor that limited the oil price slide was a Ukrainian attack on the Druzhba pipeline, which carries Russian crude to Hungary and Slovakia. The rate of deliveries is about 200,000 barrels daily.
By Irina Slav for Oilprice.com
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