Crude Oil Prices Edge Higher as Russia-Ukraine Peace Hopes Fade

Highlights:

• Crude oil rose 0.3% to US$68.25 a barrel at the time of writing, as Russia-Ukraine peace prospects weakened.
• German Chancellor Friedrich Merz ruled out a Zelensky-Putin meeting, lowering chances of a deal that could boost Russian supply.
• Russian shipments fell to 2.7 million barrels per day, the lowest in four weeks, as Ukrainian drone strikes disrupted energy infrastructure.

Setback in Diplomatic Talks

Crude oil gained ground as hopes for a peace deal between Russia and Ukraine weakened, heightening concerns of tighter supply. At the time of writing, crude was trading 0.3% higher at US$68.25 a barrel.

The move followed comments from German Chancellor Friedrich Merz, who said a meeting between Ukrainian President Volodymyr Zelensky and Russian President Vladimir Putin was unlikely — a critical step for any potential peace agreement. The diminished outlook for negotiations reduces the possibility of additional Russian crude entering global markets.

US Pressure and Supply Disruptions

The geopolitical backdrop intensified after White House trade adviser Peter Navarro urged India to halt crude purchases from Russia, accusing the country of financing Moscow’s war effort and controversially calling it “Modi’s war.” Analysts noted that such rhetoric signals the potential for fresh US sanctions on Russian oil buyers in a bid to sustain ceasefire discussions. Meanwhile, Ukraine has stepped up drone strikes on Russian energy facilities, disrupting key export pipelines. Tanker-tracking data showed Russian oil shipments dropped to 2.7 million barrels per day, the lowest in four weeks.

Market Outlook Ahead of OPEC+ Meeting

According to ANZ, rising geopolitical risks could squeeze Russian supply at a time when traders were bracing for higher output from OPEC. The OPEC+ alliance is scheduled to meet on 7 September, though no formal proposals have been outlined. Analysts anticipate a possible production increase later this year, which could shift the market into surplus if demand growth falters. For now, crude prices remain supported by concerns over restricted Russian flows, with traders closely watching both geopolitical developments and OPEC’s next policy move.

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