Morning Highlights: Trump-Putin Summit Hopes, Tight Diesel Inventories Steer Oil Prices

Oil prices steadied Friday after paring earlier gains, with geopolitical headlines continuing to dominate sentiment. Expectations for a Trump-Putin summit raised hopes of diplomatic progress on Ukraine, while tight diesel inventories helped cap losses.

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Market Snapshot (as of 06:15 EST):

• Brent (Oct): $67.36 (▲$0.47 / +0.7%)

• WTI (Sep): $64.75 (▲$0.40 / +0.6%)

Both contracts clawed back from earlier volatility after four straight sessions of losses earlier this week.

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Putin-Trump Meeting Could Shift Geopolitical Calculus

Kremlin aide Yuri Ushakov said Thursday that Russian President Vladimir Putin and U.S. President Donald Trump will meet in the coming days, marking the first such summit since 2021. While the exact date is unconfirmed, the White House has indicated it could happen as early as next week.

The prospect of diplomacy weighed on oil's early gains, analysts said. “The market is discounting a bit of the recent geopolitical risk premium,” said Giovanni Staunovo at UBS.

However, U.S. preparations for secondary sanctions on countries buying Russian oil remain underway. If enforced, these could disrupt up to 2.75 million barrels per day of Russian exports, according to JP Morgan estimates.

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Crude Inventory Draw Lends Support

The U.S. Energy Information Administration (EIA) reported a 3 million barrel drop in crude inventories last week — far exceeding analyst forecasts of a 591,000-barrel decline. Total stockpiles now sit at 423.7 million barrels.

Despite stronger domestic output, inventories continue to tighten amid stable exports and high refinery utilization.

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China Imports Stay Strong, Saudi Prices Rise Again

China’s crude imports in July fell 5.4% from June but were up 11.5% year-over-year. Analysts expect refinery demand to remain robust through Q3 as seasonal demand picks up.

Meanwhile, Saudi Arabia raised its official selling prices (OSP) for September — the second consecutive monthly hike — as the kingdom aims to capitalize on strong Asian demand and tighten supply into year-end.

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Trump Slaps New Tariffs on India, May Target China Next

On Wednesday, Trump imposed a new 25% tariff on Indian goods, citing the country’s ongoing imports of Russian oil. The new tax will take effect on August 28 and may be followed by additional China-focused tariffs.

India has vowed to defend its economic interests. The situation adds to trade tensions just as markets were stabilizing after earlier tariff deadlines.

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Diesel Inventories Remain Critically Low

Low global diesel stockpiles continue to lend underlying support to the oil complex. Refining margins are well above average in both the U.S. and Europe, with distillate inventories 12% below seasonal norms in the U.S. and near multi-year lows in Europe’s ARA hub.

“Tight diesel inventories are providing a very strong floor to oil markets in the mid-$60 per barrel range in the short term,” said JP Morgan's Natasha Kaneva.

Refinery maintenance and reduced heavy-sour crude supply from Venezuela and Russia are keeping diesel margins firm, even as broader oil markets remain subdued.

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Outlook: Diesel Offers Floor, All Eyes on Putin-Trump Summit

While OPEC+ supply increases and economic concerns remain headwinds, traders say geopolitics and refined product balances are the key drivers. The upcoming Trump-Putin meeting and any escalation in sanctions will dictate direction next week.

“Until we see the summit outcome and tariff clarity, oil may remain range-bound with a bullish bias from product strength,” analysts at Roth Capital said.