Oil prices were marginally up on Monday as investors looked towards talks between the US and Russia over the war in Ukraine later this week, with Brent crude chalking up 4 cents or 0.06 per cent to trade at $66.63 a barrel and the US West Texas Intermediate (WTI) crude growing by 8 cents or 0.13 per cent to $63.96 per barrel.
US President Donald Trump said last Friday he would meet Russian President Vladimir Putin on August 15 in Alaska to negotiate an end to the war in Ukraine.
The deadline President Trump had set for Russia to end the war in Ukraine passed, and no stricter sanctions were effected as threatened.
Russia’s demands include the Ukrainian government ceding eastern provinces, which it has indicated it would not agree to, and this casts doubts over the success of the Trump-Putin talks.
President Trump said on Monday that both Ukraine and Russia would have to cede land to each other to end the war and that his talks with Putin would be aimed at taking the temperature on a possible deal.
Bloomberg cited unnamed sources as saying the deal would indeed likely include recognizing the Donbass as Russian and the US side was working to convince the Ukrainians and their European backers to accept it. This, however, was unlikely, the Bloomberg sources said, making any successful deal to end the hostilities highly uncertain. This, in turn, means the upside potential for oil prices remains rather intact.
Meanwhile, market analysts warned that President Trump’s tariffs on a host of trade partners continue to pressure oil prices due to their expected negative effect on overall economic activity in much of the world.
Prices have fallen in recent days as market participants lowered supply disruption estimates, probably because the US imposed an extra tariff only on India rather than all buyers of Russian oil.
Reuters also reported that the oil output by the Organisation of the Petroleum Exporting Countries (OPEC) rose further in July after agreement by OPEC and its allies (OPEC+) to raise production. However, the hike was limited by Iraq making additional cuts and by drone attacks on Kurdish oilfields.