Oil prices fell on Tuesday as hopes of a Russia-Ukraine peace deal and eased sanctions on Russian crude raised expectations of higher global supply.
Futures Take A Hit
Brent crude futures fell to $65.79 a barrel, down 81 cents, or 1.22%, while U.S. West Texas Intermediate (WTI) for September delivery, set to expire on Wednesday, dropped $1.07 to $62.35 a barrel, a 1.69% decline.
Diplomatic Moves
However, the market reacted after a White House meeting on Monday, where Ukrainian President Volodymyr Zelenskiy met European allies.
Subsequently, U.S. President Donald Trump revealed on social media that he had spoken with Russian President Vladimir Putin.
He added that he was arranging a meeting between the two leaders, which could lead to a trilateral summit involving all three.
Global Oil Supply Eases
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Lead energy analyst at DBS Bank, Suvro Sarkar, said Trump’s softer stance on secondary sanctions targeting importers of Russian oil has eased fears of global supply disruptions and slightly reduced geopolitical tensions.
Meanwhile, Chinese refineries have purchased 15 cargoes of Russian oil for October and November delivery, as Indian demand for Moscow’s exports has fallen.
Security Talks Continue
Zelenskiy described his discussions with Trump as “very good” and highlighted talks on potential U.S. security guarantees for Ukraine.
Trump confirmed that the U.S. would provide support, though the exact scope remains unclear.
Although Trump has pressed for a swift end to Europe’s deadliest war in eight decades, Kyiv and its allies worry that he could push for a deal favouring Russia.
“An outcome that reduces tensions and removes threats of secondary tariffs or sanctions would likely push oil lower, toward our $58 per barrel Q4-25/Q1-26 target,” said head of commodity strategy at TD Securities, Bart Melek.
