Oil gained as the waning prospect of a peace agreement between Russia and Ukraine reduced the likelihood of more of Moscow’s supplies reaching broader markets in the near term.
West Texas Intermediate crude rose 0.7% to top $64 a barrel, reversing earlier losses, after German Chancellor Friedrich Merz told reporters that a meeting between Ukrainian President Volodymyr Zelensky and Russia’s Vladimir Putin “won’t happen.” Talks between the leaders were seen as a step toward a peace deal that could pave the way for reduced restrictions on Russian crude exports.
President Donald Trump is also set to release a statement on Russia and Ukraine later, leading traders to hedge for stricter penalties on Moscow’s energy shipments.
“Trump is going to have to decide if he really wants to impose sanctions or give negotiations one more go,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. Still, “the market is used to the can being kicked down the road, so very minimal risk premium is being priced in.”
Ukraine has ramped up drone attacks on Russia’s oil infrastructure over the past month, most recently hitting two refineries. Moscow’s crude exports slipped last week, tanker-tracking data compiled by Bloomberg showed, after Ukraine intensified its attacks.
The development comes as White House trade adviser Peter Navarro stepped up pressure on India to halt purchases of Russian oil after Washington doubled a levy on imports from the country to 50%.
Still, the outlook remains overall bearish. Oil markets are widely expected to move into a surplus toward the end of the year, as higher output from the OPEC+ alliance and outside of the grouping overwhelms demand. The producer group is due to meet on Sept. 7, but no talks have been held yet about its next moves, according to a senior OPEC delegate.
Trading activity this week also was muted ahead of the Labor Day holiday weekend in the US, contributing to choppy moves.
Oil Prices
WTI for October delivery rose 0.7% to settle at $64.60 a barrel in New York.
Brent for November advanced 0.8% to settle at $68.62 a barrel.
The October contract expires Friday.
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