Oil prices rise amid tensions over Trump-Putin talks
14 August 08:52
Oil prices continued to rise on Thursday due to investor caution ahead of the US-Russia summit scheduled for Friday. Market participants fear both a possible easing of sanctions against Russian oil and the imposition of additional restrictions on its buyers, "Komersant Ukrainian" reports citing Reuters.
According to OilPrice.com, futures for Brent crude rose by 28 cents (0.43%) to $65.91 per barrel as of 08:33 Kyiv time. U.S. WTI crude rose 27 cents (0.43%) to $62.92 per barrel.
On Wednesday, both contracts hit two-year lows after pessimistic supply forecasts from the US government and the International Energy Agency.
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Trump’s talks with Putin
US President Donald Trump on Wednesday warned of “serious consequences” if Putin refuses to agree to peace in Ukraine. Although he did not specify the nature of the possible measures, the American leader had previously spoken of economic sanctions in the event of a failure of the Alaska talks. In particular, Trump has previously threatened to impose secondary tariffs against buyers of Russian oil, primarily China and India, if Russia continues the war in Ukraine.
“The uncertainty surrounding the US-Russia peace talks continues to create a risk premium due to possible additional economic pressure on Russian oil buyers,”
– said Rystad Energy analysts.
According to the experts, the way the Ukrainian-Russian crisis is resolved and changes in Russian supplies may bring unexpected surprises to the market.
“It is clear that the market faces the risk of price increases if there is little progress,”
– said Warren Patterson, Head of Commodity Strategy at ING.
The expert noted that the expected oil surplus in the second half of this year and in 2026, combined with OPEC’s spare capacity, means that the market will be able to cope with the impact of secondary tariffs on India. However, the situation will become more complicated if similar measures are introduced against other key buyers of Russian oil, including China and Turkey.
Prices are also under pressure from the International Energy Agency’s forecast of faster-than-expected growth in global supplies in 2025-2026 due to increased OPEC production and increased production outside the cartel.
The situation in the United States
Additional support for oil prices came from expectations of a rate cut by the US Federal Reserve in September. Traders are almost 100% confident in this decision after a moderate increase in inflation in July.
Treasury Secretary Scott Bessent said that an aggressive half-point cut was possible given the weak employment figures.
According to the CME FedWatch tool, the probability of a quarter-point rate cut at the Fed meeting on September 16-17 is 99.9%. Lower lending rates will stimulate demand for oil.
At the same time, the price increase was restrained by an unexpected increase in US crude oil stocks by 3 million barrels in the week ended August 8, according to the US Energy Information Administration.
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How to hurt Russia over oil
It is well known that Russia is critically dependent on its energy exports. First of all, on oil exports. In 2024, the Russian federal budget revenues from oil sales amounted to 9.19 trillion rubles (approximately $89.4 billion). Total budget revenues for this period amounted to 36.71 trillion rubles. Thus, the share of oil revenues in the total structure of Russian budget revenues in 2024 was approximately 25%
This indicates that, despite international sanctions and attempts to diversify revenue sources, oil remains a key source of financing for the Russian budget.
Russian Urals oil is traditionally sold at a lower price than Brent and WTI, and it is also subject to additional factors that raw materials from other countries do not experience, namely Western sanctions. However, during all three years of the full-scale war with Ukraine, Russia has been successfully selling its oil – its main buyers today are China and India.
The federal budget of the Russian Federation for 2025 included an oil price of $70. However, according to the Ministry of Finance, on August 12, the price of Russian Urals was $62.52 per barrel. Against this backdrop, the Russian state budget deficit has already amounted to 4.88 trillion rubles, or 2.2% of GDP, and more than a trillion of this has been accumulated over the past month. This hole in the treasury is almost 4.5 times higher than in the same period in 2024, when the deficit was 1.1 trillion rubles, or 0.5% of GDP.
So far, market analysts’ forecasts do not promise Russia any serious problems related to the oil price, as it still has a very large backlash for sales. According to economic expert Oleg Pendzin, even a price of $50 per barrel is still acceptable for Russia.
“Currently, the direct cost of Russian oil production is about $37-38 per barrel. This is the direct cost. The critical figure for Russia is the sales price of $45,”
– the economist explained exclusively for .
Therefore, the most likely way to hurt Russia over oil is still to increase sanctions, including secondary sanctions against its buyers. The point of this step is to make it physically impossible for Russia to sell large volumes of oil and thus receive funds to continue its aggressive war of aggression.
