Oil Prices Slide Ahead of US-Russia Summit in Alaska

Highlights:

• Brent crude traded near US$66 and WTI above US$63 at the time of writing, extending last week’s 4.4% drop.
• US-Russia summit in Alaska raises prospects of a Ukraine peace deal that could lift sanctions on Russian oil.
• OPEC+ output increases and slowing global growth heighten concerns over an oil market glut later this year.

Global oil prices declined on Monday, extending losses from their steepest weekly drop since late June. The fall comes as markets anticipate a high-level meeting between the United States and Russia on Friday, raising speculation about a possible resolution to the war in Ukraine and the potential return of more crude supply.

Market Movements

At the time of writing, Brent crude was trading near US$66 a barrel, following a 4.4% drop last week. West Texas Intermediate (WTI) hovered above US$63. The downturn follows US President Donald Trump’s announcement of a summit with Russian President Vladimir Putin in Alaska, without imposing additional sanctions or energy-related tariffs — despite his earlier 8 August deadline for a Russian ceasefire.

Geopolitical Factors in Play

Sources familiar with the discussions say Washington and Moscow are working toward a deal that could formalise Russia’s control over territories it has occupied during the invasion. The US is reportedly trying to gain support from Ukraine and European allies, though consensus is far from certain.

A peace agreement could result in the removal of restrictions on Russian oil exports, potentially increasing global supply. This has raised concerns among traders already wary of oversupply pressures later in the year.

OPEC+ and Demand Outlook

Oil has shed more than 10% in 2024 as OPEC+ members ramp up production faster than initially planned, ending the output cuts introduced in 2023. Meanwhile, slowing global economic growth threatens to dampen fuel demand. Analysts warn that a combination of higher Russian supply and weaker consumption could intensify the expected market glut, adding further downward pressure on prices in the coming months.

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