Global crude oil prices fell at the start of this week after posting their biggest weekly decline since late June. This decline comes ahead of a crucial meeting between US President Donald Trump and Russian President Vladimir Putin next Friday, which has raised hopes of a peace deal to end the war in Ukraine. Brent prices are trading near $66 per barrel after falling 4.4% last week, while West Texas Intermediate (WTI) is holding steady above $63.

The market responded to Trump's statement that he did not announce additional sanctions against Russia or tariffs on Russian energy buyers when announcing the planned meeting in Alaska. However, the August 8 deadline remains in place for the Kremlin to agree to a ceasefire. Behind the scenes, US and Russian officials are reportedly working on a deal that would allow Moscow to retain captured territory, with diplomatic support from Ukraine and its European allies—although the final outcome remains uncertain.

Global supply factors are also driving pressure on oil prices. So far this year, oil has lost more than 10% of its value due to the OPEC+ policy of accelerating production increases ahead of schedule, ending restrictions imposed since 2023. Meanwhile, slowing global economic growth has also raised concerns about reduced energy consumption in the second half of the year.

If a Ukraine-Russia peace agreement is reached, sanctions on Russian energy supplies could be lifted. This could exacerbate the projected oil oversupply towards the end of the year. According to Robert Rennie of Westpac, if tensions subside, Brent prices could fall below $65, even risking touching levels below $60 in the fourth quarter of this year.

Investors are currently awaiting several key reports to gauge the direction of the global oil market balance. OPEC will release its monthly market analysis later this week, while the US Energy Information Administration (EIA) is scheduled to release its Short-Term Energy Outlook on Tuesday. The International Energy Agency (IEA) will also issue a market report on Wednesday. Meanwhile, tensions have not completely subsided, after Ukraine claimed to have launched a drone attack on a major oil refinery in Russia's Saratov region, adding to a long list of attacks on Russian energy infrastructure this month. (alg)

Source: Newsmaker.id