Oil declines with the world focused on Trump-Putin summit in Alaska

Oil prices fell on Friday as traders awaited the anticipated talks between US President Donald Trump and Russian President Vladimir Putin, which some expect could lead to easing sanctions on Moscow over the Ukraine war.

Brent crude futures fell by 50 cents, or 0.8%, to $66.34 a barrel by 09:23 GMT. US West Texas Intermediate crude futures declined by 57 cents, or 0.9%, to $63.39 a barrel.

The issue of a ceasefire in Ukraine tops the agenda for Friday’s meeting between Trump and Putin in Alaska. Trump has said he believes Russia is ready to end the war, but at the same time has threatened to impose secondary sanctions on countries buying Russian oil if peace talks make no progress.

Giovanni Staunovo, commodity analyst at UBS, said: “The market is watching to see whether there will be a ceasefire agreement or not. Ceasefire expectations imply an increase in Russian production. The question is: will there be escalation or de-escalation?” He noted that even if an agreement is reached, lifting sanctions on Russia would take longer as it would require US Congress approval.

Over the week, WTI is on track for a 0.7% decline, while Brent is set for a slight gain of 0.4%.

Also on Friday, weaker-than-expected economic data from China raised concerns about fuel demand. Chinese government data showed industrial output growth slowed to its weakest in eight months, while retail sales growth posted its slowest pace since December, weighing on sentiment despite higher oil refining rates in the world’s second-largest crude consumer.

China’s refinery output rose 8.9% year-on-year in July but fell from June levels, which had been the highest since September 2023. Despite the increase, China’s exports of petroleum products rose last month compared with a year earlier, indicating weak domestic fuel demand.

The market was also pressured by expectations of a growing oil supply surplus, alongside prospects for US interest rates remaining high for longer. Analysts at Bank of America said in a Thursday note that they had widened their forecast for a surplus in the oil market, citing increased supply from the OPEC+ alliance, which includes the Organization of the Petroleum Exporting Countries, Russia, and other allies.

Analysts now expect an average surplus of 890,000 barrels per day between July 2025 and June 2026, in line with earlier estimates from the International Energy Agency this week, which said the oil market appears “oversupplied” following production increases from OPEC+.