Morning Highlights: Oil falls as peace talk hopes lift supply outlook

Crude prices eased Tuesday as traders weighed the possibility that U.S.-brokered talks between Russia and Ukraine could pave the way for sanctions relief on Russian oil, adding supply to global markets.

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Market Snapshot (as of 06:00 EST):

• Brent (Oct): $65.95 (▼$0.65 / –1.0%)

• WTI (Sep): $62.81 (▼$0.61 / –1.0%) – expires Wednesday

• WTI (Oct): $62.10 (▼$0.60 / –1.0%) – more active contract

Both benchmarks had settled nearly 1% higher on Monday but gave back gains as diplomacy introduced downside supply risk.

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Trump Pushes for Trilateral Summit

After meeting Ukrainian President Volodymyr Zelensky and European allies in Washington Monday, President Trump said he spoke with Russian President Vladimir Putin and announced that arrangements are underway for a Putin-Zelensky face-to-face, potentially followed by a U.S.-Russia-Ukraine trilateral summit.

“Oil prices are largely responding to outcomes of recent meetings… and while no outright peace deal or ceasefire seems imminent, there has been some progress made,” said Suvro Sarkar of DBS Bank.

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Reduced Sanctions Risk Weighs on Prices

Trump’s softened stance on secondary sanctions against importers of Russian crude has eased concerns of abrupt supply disruptions. Analysts noted this is pressuring prices lower:

• TD Securities’ Bart Melek: A de-escalation that removes threats of secondary tariffs or sanctions could pull Brent toward $58/bbl into late 2025.

• ING analysts: Betting markets now put ceasefire odds at 38%, down from a March peak of 78%. The lack of momentum reflects sticking points over Donbass and NATO membership.

Zelensky confirmed U.S. security guarantees were discussed, but Kyiv remains cautious about being forced into concessions on territory.

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India Tariff Deadline Adds Pressure

Trump reaffirmed that tariffs on India’s Russian crude imports will take effect at the end of August. Negotiators now face a narrow window to strike a deal that avoids disruption in global oil flows.

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Ukraine Strike on Druzhba Pipeline

Ukrainian forces hit the Druzhba pipeline, which supplies about 200,000 bpd of Russian crude to Hungary and Slovakia. While the disruption was not seen as major, it added a modest floor under prices.

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Outlook: Talks Drive the Tape

Markets remain hostage to diplomacy:

• Bearish case: Ceasefire progress or sanctions relief would boost supply and push Brent lower toward $60.

• Bullish case: Tariffs on India or renewed Russian disruptions could flip sentiment quickly.

“Without concessions on Donbass, peace is still elusive,” ING’s Warren Patterson said. “The modest price action this morning fits with low ceasefire odds.”