Oil prices fell by more than 1 per cent to end the week lower as leaders of the US and Russia held a meeting in Alaska to end the Ukraine war that has shaken oil markets for more than three years with supply concerns.
Brent, the benchmark for two thirds of the world's oil, settled 1.48 per cent lower at $65.85 a barrel, while West Texas Intermediate – the gauge that tracks US crude – was down 1.81 per cent at $62.8 a barrel.
For the week, Brent dropped 1.1 per cent, while WTI eased 1.7 per cent.
Russian President Vladimir Putin and US President Donald Trump met in Alaska on Friday to hold discussions to end Ukraine war that has killed hundreds of thousands of people and disrupted global financial and commodity markets.
However, the summit ended without a ceasefire deal but Mr Trump described his meeting with his Russian counterpart as “productive”, adding that they “really made some great progress” on ending the war.
“There were many, many points that we agreed on, most of them, I would say, a couple of big ones that we haven't quite got there, but we've made some headway,” Mr Trump told reporters. “I've always had a fantastic relationship with President Putin, with Vladimir.”
Mr Trump offered no further details of their discussions in an interview with Fox News after the meeting, but raised the possibility of another summit that included Ukrainian President Volodymyr Zelenskyy.
"While there was no ceasefire, US President Trump made also clear that he doesn't plan to penalise the largest buyer of Russian oil, China," Giovanni Staunovo, a strategist at Swiss bank UBS told The National.
"I guess market participants will today track comments from European leaders, but for now Russian supply disruption risks will remain contained."
Oil markets were heavily affected after war broke out between Russia and Ukraine more than three years ago.
Oil prices surged to $140 a barrel in March 2022, following Russia’s invasion of Ukraine and the subsequent sanctions by the US and the UK on the import of crude from Moscow.
However, prices fell in the subsequent months, amid a number of factors impacting markets, including concerns of a global economic slowdown, high inflation and a China slowdown.
A ceasefire deal between Ukraine and Russia could have a bearish effect on oil markets as more Russian oil could flow into global markets if sanctions are eased on Moscow. However, if the peace agreement is not reached between the two countries, it will support oil prices by limiting Russian supply.
“US crude recently breached the $65 support and is consolidating in a medium-term bearish zone, where ample supply and cloudy demand argue for further downside – though a softer dollar is cushioning the slide,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Supply forecast for 2025
The International Energy Agency this week raised its forecast for oil supply growth this year following a decision by the Opec producer group to hike production and lowered its demand forecast due to lacklustre demand across the major economies.
The IEA expects world oil supply to rise by about 370,000 barrels a day to 2.5 million barrels a day in 2025 and by 620,000 bpd to 1.9 million bpd in 2026, after the eight Opec members this month decided to raise production by another 547,000 bpd in September, fully unwinding the 2.2 million bpd cuts agreed to in November 2023.
World oil demand will rise by 680,000 bpd this year, down from 700,000 bpd previously forecast, the Paris-based agency said.
“The latest data show lacklustre demand across the major economies and, with consumer confidence still depressed, a sharp rebound appears remote,” the Paris-based agency said.
Consumption in emerging and developing economies has been weaker than expected, with China, Brazil, Egypt and India all revised down compared with last month’s IEA report.
