Oil Slips as Traders Eye Trump-Putin Summit and China’s Demand Woes

Oil prices dipped Friday as the market held its breath for the high-stakes Trump-Putin meeting in Alaska — a sit-down that could shift sanctions policy and, by extension, global crude flows.

By early afternoon in London, Brent crude was down 89 cents (1.3%) at $65.95 a barrel, while US West Texas Intermediate fell 97 cents (1.5%) to $62.99. The drop came ahead of the 3 p.m. New York time summit, where a Ukraine ceasefire will top the agenda.

President Trump says he thinks Moscow is ready to end the war but has warned of “very severe consequences” — including secondary sanctions on countries buying Russian crude — if the talks stall. A breakthrough could mean more Russian barrels hitting the market, while failure could keep existing restrictions in place.

“The market is watching out for whether there is a ceasefire or not,” said UBS commodities analyst Giovanni Staunovo. “An expectation of a ceasefire translates into more Russian production. The question is, will there be escalation or de-escalation?”

Russia, the world’s second-largest oil exporter after Saudi Arabia, has leaned heavily on Chinese and Indian buyers since Western sanctions took hold. But Trump has been tightening the screws — last week doubling tariffs on Indian goods to 50% over its Russian crude purchases, while mulling crackdowns on the “shadow fleet” of tankers moving sanctioned oil. China, so far, has been spared direct measures, likely to avoid a price shock for US consumers.

Even without geopolitics, oil was already under pressure. Chinese factory output in July hit an eight-month low and retail sales slowed to their weakest pace since December. While refinery runs were up 8.9% year-on-year, they slipped from June’s highs, and rising fuel exports hint at softer domestic demand.

On top of that, forecasts are turning gloomier. The International Energy Agency this week described the market as “bloated,” and Bank of America now projects an average surplus of 890,000 barrels per day from July 2025 to June 2026, citing stronger-than-expected OPEC+ supply.

For the week, WTI is on track for a 0.7% loss, while Brent is eyeing a slim 0.4% gain. But with the Alaska summit likely to wrap after Friday’s market close, the real price moves — up or down — won’t come until trading resumes Monday in Asia.

As A/S Global Risk Management’s Arne Lohmann Rasmussen put it:

“Tonight’s meeting is unlikely to deliver significant results. But a follow-up meeting? That’s where Trump might start shifting responsibility — or sanctions — depending on how Putin plays it.”

Reuters and Bloomberg contributed to this report.