Oil prices fell in Asian trade on Monday, extending declines of more than 4% last week as investors awaited the outcome of talks between the U.S. and Russia later this week on the war in Ukraine.

Brent crude futures fell 62 cents, or 0.93%, to $65.97 a barrel by 0631 GMT, while U.S. West Texas Intermediate crude futures were down 69 cents, or 1.08%, to $63.19.

Expectations have risen for a potential end to sanctions that have limited the supply of Russian oil to international markets, after U.S. President Donald Trump said on Friday that he would meet Russian President Vladimir Putin on August 15 in Alaska to negotiate an end to the war in Ukraine.

The talks follow increased U.S. pressure on Russia, raising the prospect that penalties on Moscow could also be tightened if a peace deal is not reached.

"If peace talks falter and the conflict drags on, the market could quickly pivot to a bullish stance, potentially triggering a sharp rally in oil prices," said Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm.

Trump set a deadline of last Friday for Russia, which invaded Ukraine in February 2022, to agree to peace or have its oil buyers face secondary sanctions. At the same time, Washington is pressing India to reduce purchases of Russian oil.

Consultancy Energy Aspects estimated Indian refiners have already purchased WTI totalling 5 million barrels for August loadings, with an incremental 5 million barrels possible depending on tender outcomes, and 5 million barrels for September loadings.

WTI arbitrage to Asia remains open, and India looks set to continue absorbing U.S. crude for now, Energy Aspects said in a weekly note.

Trump's higher tariffs on imports from dozens of countries, which took effect on Thursday, are expected to weigh on economic activity as they force changes to supply chains and fuel higher inflation.

Dragged down by the gloomy economic outlook, Brent fell 4.4% over the week ended Friday, while WTI dropped 5.1%.

"The near-term direction will hinge on several key events, including the August 15 meeting between the U.S. and Russian presidents, upcoming speeches from Federal Reserve officials, and the release of the U.S. CPI data," said Sachdeva.

Separately, data from the National Bureau of Statistics on Saturday showed China's producer prices fell more than expected in July, while consumer prices remained flat, highlighting the extent to which weak domestic demand and ongoing trade uncertainty are weighing on consumer and business sentiment.

Source: Reuters