Oil fell to a fresh five-month low after US President Donald Trump said he’ll meet with Russian counterpart Vladimir Putin to discuss ending the war in Ukraine, raising expectations that Russian crude may soon flow freely.
West Texas Intermediate fell 1.4% Thursday to settle near $57 a barrel, the lowest since May. Trump announced on social media that the US and Russia will hold high-level talks focused on ending the war next week, followed by a leaders’ summit in Budapest.
The prospect of a Russia-Ukraine truce comes amid mounting pressure on Moscow’s oil infrastructure. Russian exports of refined fuels have slumped to the lowest since the onset of the war, underscoring continued strain on the country’s refineries targeted by drone attacks.
At the same time, Western nations are turning the screws on Russia’s energy sector in a bid to curb the flow of petrodollars to the Kremlin and limit Putin’s ability to finance the war. The UK recently slapped sanctions on Russia’s biggest oil producers, two Chinese energy firms and Indian refiner Nayara Energy Ltd. because of their handling of Russian fuel.
The development took some air out of the earlier rally after India’s oil refiners said they expect to reduce — not stop — the purchase of Russian crude, a move that could squeeze global supply, following remarks by Trump that the South Asian nation would halt all buying. India, along with neighbor China, has made the most of discounted Russian supplies accessible under a Group of Seven price cap mechanism that was designed to keep oil flowing while limiting Moscow’s access to funds.
Crude has fallen this month as increased trade tensions between the US and China raised concerns about demand in the two biggest crude consumers, and as major trading houses said a long-anticipated oversupply is already starting to emerge.
“The softness in oil demand seen in early October persisted into the second week, with both US and Chinese port activity continuing to weaken,” JPMorgan Chase & Co. analysts wrote in a note Thursday. “In China, the slowdown was largely due to the mid-autumn festival break, while in the US, it reflected the end of front-loading and the impact of higher tariffs.”
A US government report, meanwhile, painted a mixed picture of the domestic oil market. While refinery runs were down in nearly all regions, pulling the nationwide figure to the lowest seasonal level since 2021, crude stockpiles at the hub in Cushing, Oklahoma, fell to the lowest since July and product inventories declined.
Prices:
WTI for November delivery fell 1.4% to settle at $57.46 a barrel in New York.
Brent for December settlement declined 1.4% to close at $61.06 a barrel.
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