Oil prices fall as Ukraine talks raise prospect of sanctions easing
FILE PHOTO: A pumpjack operates at the Vermilion Energy site in Trigueres, France, June 14, 2024. REUTERS/Benoit Tessier/File Photo
LONDON :Oil prices fell on Tuesday as traders weighed the possibility that talks between Russia, Ukraine and the U.S. to end the war in Ukraine could lead to the lifting of sanctions on Russian crude, raising supply.
Brent crude futures fell 48 cents, or 0.72 per cent, to $66.12 a barrel by 0820 GMT. U.S. West Texas Intermediate crude futures for September delivery, set to expire on Wednesday, fell 40 cents, or 0.63 per cent, to $63.02 per barrel.
The more active October WTI contract was down 46 cents, or 0.73 per cent, at $62.24 a barrel.
Prices settled around 1 per cent higher in the previous session.
Following a White House meeting on Monday with Ukrainian President Volodymyr Zelenskiy and European allies, U.S. President Donald Trump announced in a social media post that he had spoken with Russian President Vladimir Putin.
Trump said arrangements were being made for a meeting between Putin and Zelenskiy, which could lead to a trilateral summit involving all three leaders.
"Oil prices are largely responding to outcomes of recent meetings between Trump-Putin and Trump-Zelenskiy, and while no outright peace deal or ceasefire seems imminent, there has been some progress made," Suvro Sarkar, lead energy analyst at DBS Bank, said.
"Chances of further escalation or intensification of sanctions on Russia from the U.S. or Europe may be off the table for now."
Sarkar also noted that Trump's softened stance on secondary sanctions targeting importers of Russian oil has reduced the risk of global supply disruptions, easing geopolitical tensions slightly.
Zelenskiy described his talks with Trump as "very good" and noted discussions about U.S. security guarantees for Ukraine. Trump confirmed the U.S. would provide such guarantees, though the extent of support remains unclear.
Trump has pressed for a quick end to Europe's deadliest war in 80 years, but Kyiv and its allies worry he could seek to force an agreement on Russia's terms.
"An outcome which would see a ratcheting down of tensions and remove threats of secondary tariffs or sanctions would see oil drift lower toward our $58 per barrel Q4-25/Q1-26 average target," Bart Melek, head of commodity strategy at TD Securities, said in a note.
