Oil prices decreased further this week amid a forecasted rise in US crude inventories, signalling weaker demand, and ongoing uncertainty over Washington-Moscow talks.
The American Petroleum Institute (API) forecasted over a 1.5 million-barrel increase in US crude inventories for the week ending Aug. 8, defying market expectations for a 800,000 barrel draw. Signs of a build in US inventories raised some questions about demand in the world's largest oil consumer, putting downward pressure on prices.
Oil prices also extended losses as uncertainty surrounding an upcoming meeting between Trump and Russian President Vladimir Putin persists. Progress toward a ceasefire could ease supply concerns and lower prices, but the risk of no agreement limits further price decline.
Over the past couple of weeks U.S. President Donald Trump has renewed efforts to broker a peace deal between Russia and Ukraine, going as far as proposing the swapping of territories between the two countries.
Unlike the situation during the first meeting between Trump and Russia’s President Vladimir Putin earlier in the year, Trump has adopted a far less conciliatory tone ahead of their second meeting in Alaska today (August 15th), warning that Russia will face “very severe consequences” unless Putin agrees to end the war in Ukraine.
However, the White House says it expects the Anchorage summit to be a “listening exercise,” downplaying the odds of a peace deal being reached. Still, the potential of a return of more Russian energy commodities to the markets has depressed oil and gas prices amid expectations that a breakthrough in the negotiations could see sanctions on Russian exports lifted.
Commodity analysts at Standard Chartered have pointed out that fears that oil prices will crash if Trump manages to negotiate a truce with Putin are overdone. First off, StanChart says that Russia has been producing unsustainably at its maximum capacity with long-term consequences for its reservoirs. The country’s oil production averaged 9.01 million barrels per day (mb/d) in H1-2025, about 610,000 b/d lower than the 2021 annual average before the invasion of Ukraine.
A lifting of export sanctions will mean a return of Western service companies and Russia being able to access quality replacement parts; however, Russia just doesn’t have a lot of spare production capacity to flood the oil markets.
Second, Russia might demand the removal of the oil price cap by Western nations as part of the peace deal. However, the analysts have pointed out that the removal of the price cap would eliminate the price advantage for India and China to take Russian crude, currently the biggest buyers of discounted Russian oil. StanChart points out that India has been an opportunistic purchaser of cheaper Russian crude and could revert to its previous import volumes with dire consequences for Russia.
Given the additional efforts Russia has undertaken to evade export sanctions, StanChart has predicted that we are unlikely to see a large increase in Russian supply to the global markets in the near term. JP Morgan echoes StanChart’s view, saying that Russia has limited scope to expand its shadow fleet of tankers used to transport its crude.
Finally, Russia might not dramatically increase its crude exports for the simple reason that there might not be a ready market for the commodity. After all, Europe has successfully cut its dependency on Russian oil and gas over the past three years, and the continent is highly unlikely to put itself in such a vulnerable position again, especially after Moscow revealed its willingness to weaponize its energy commodities.
Fuel card prices will drop by another 1.5ppl for next week.
