Oil Prices Stabilize Amid Anticipation of Trump-Putin Meeting

SadaNews Economy - Oil prices closed with little change after a volatile session, as investors assessed whether a potential agreement between the United States and Russia to end the war in Ukraine would gain international support and effectively impact Russian crude flows.

The price of Brent crude for October settlement rose by 16 cents to reach $66.59 per barrel, while West Texas Intermediate crude fluctuated within a range of approximately $1.80 before finishing the day stable just below $64 per barrel, breaking a six-session losing streak.

The United States and Russia are seeking an agreement that would solidify Moscow's control over the territories it seized during its war on Ukraine, according to sources familiar with the matter. Washington is working to obtain the approval of Ukraine and its European allies for the agreement, which remains far from confirmation.

A Ceasefire Agreement and Solidifying Russian Gains

The United States and the European Union targeted Russia's oil revenues in response to its war on Ukraine, while U.S. President Donald Trump doubled tariffs on all Indian imports to 50% this week as punishment for New Delhi's purchase of Russian crude and threatened similar actions against China.

Despite investor skepticism that Europe would support an agreement that represents a major victory for Russian President Vladimir Putin, renewed cooperation between Washington and Moscow has boosted expectations of continued free flow of Russian crude to its largest buyers.

However, market attention is focused on whether U.S. sanctions on Russia, which have curtailed Moscow's ability to sell oil and refinance the Kremlin's treasury in recent months, will remain in place.

Bob McNally, founder of Rapidan Energy Group and a former White House official, stated that "a potential ceasefire would have a slight bearish impact on oil prices, assuming U.S. and European sanctions on Russian energy are not lifted, as the market is not currently pricing in significant supply risks." He added that the proposed agreement resembles a ceasefire rather than a full peace agreement.

Resilience in Facing Supply Challenges

In recent years, oil traders, producers, and consumers have demonstrated their ability to adapt to supply challenges, whether stemming from conflicts, geopolitical risks, or administrative obstacles such as sanctions and tariffs.

Indicators of this resilience this week include offering shipments of Russian Ural crude, coming from the west of the country, to Chinese buyers who do not typically consume this type.

Russian President Vladimir Putin demands that Ukraine cede the eastern Donbas region to Russia, in addition to the Crimea Peninsula that his forces unlawfully annexed in 2014, which requires Ukrainian President Volodymyr Zelensky to order the withdrawal of troops from parts of the Luhansk and Donetsk regions still under Kyiv's control.

Deteriorating Outlook in the Oil Market

This development has exacerbated the general bearish trend as the peak summer demand season nears its end, with oil falling more than 7% in August after three months of gains.

Investors are bracing for a potential supply surplus later this year, as the OPEC+ alliance has agreed to ease supply restrictions. At the same time, crude futures are under pressure from signals of slowing growth in the world's largest economy, with the broad tariffs imposed by Trump on economic activity posing risks to energy demand.

In another indicator of deteriorating conditions, commodity trading advisors, who tend to accelerate price moves, shifted to net short positions on Friday for the first time since early June, according to data from Bridgeton Research Group.

The company noted that algorithmic traders are now in short positions by 36% on West Texas crude, compared to just 18% a day earlier, while global Brent crude is positioned at 27% short, compared to 9% long on Thursday.