Oil prices fell nearly 1 per cent on Monday morning as markets awaited the outcome of talks between the US and Russian leaders to end the war in Ukraine later this week in Alaska.
Brent, the benchmark for two thirds of the world's oil, was down by 0.84 per cent at 11.26am UAE time to $66.03 a barrel, while West Texas Intermediate, the gauge that tracks US crude, was trading 0.99 per cent lower at $63.25 a barrel.
US President Donald Trump announced last week that he would be meeting Russian President Vladimir Putin in Alaska on Friday, raising expectations of an end to the Ukraine war and a potential return of Russian crude into global markets.
The latest announcement comes as the US continues to pile pressure on customers buying oil from Russia, in an effort to curtail Moscow’s oil revenues.
Last week, the US slapped India with 25 per cent additional tariffs for buying Russian oil.
The “attention is on Ukraine and optimism that there could be progress”, said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“The ample supply and cloudy demand outlook support the bearish camp, yet any disappointment on the Ukraine front could rapidly reverse the latest decline and send the price of a barrel back above the $65 per barrel level.”
Both Brent and WTI posted losses last week on expectations of more supply entering the market as US and Russia negotiated to end the more-than-three-year-old Ukraine war.
Brent futures closed down by 4.4 per cent week-on-week on Friday at $66.6 per barrel, while WTI fell by 5.1 per cent to $63.9 per barrel.
Oil is also under pressure as Opec+ members continued to boost supply.
This month, Opec+ has agreed to increase its oil production by 547,000 barrels per day for September, as the alliance of oil producers led by Saudi Arabia and Russia unwind voluntary cuts introduced during the Covid-19 pandemic.
The decision marks the sixth month in a row the group has raised output as it gradually restores 2.2 million barrels per day of supply that was withheld from the market.
“Oil has fallen over 10 per cent this year as Opec+ restores production faster than planned and slowing global growth clouds demand prospects,” Soojin Kim, research analyst at MUFG Bank, said.
“A peace deal could end sanctions on Russian oil, heightening the risk of a supply glut later in 2025.”
Oil markets remained volatile this year amid Mr Trump’s tariff plans and the Iran-Israel conflict.
Oil prices started the year strongly. The closing price of Brent, the benchmark for two-thirds of the world's oil, peaked at more than $82 a barrel on January 15, while West Texas Intermediate, the gauge that tracks US crude, hit almost $79 per barrel on that day.
However, demand concerns, a slowing global economy and less-than-stellar growth in China, the world's largest crude importer, have dampened crude prices this year.
