Oil prices eased in Asian trade on Monday as investors awaited talks between the United States and Russia later this week that could affect sanctions and the flow of Russian oil into international markets.
By 3:35 pm AEST (5:35 am GMT), Brent crude futures fell by 36 cents, or 0.5%, to US$66.23 per barrel, while U.S. West Texas Intermediate (WTI) crude was down 43 cents, or 0.7%, at $63.45.
Market expectations that sanctions on Russian oil might be loosened rose after U.S. President Donald Trump said on Friday that he would meet Russian President Vladimir Putin on 15 August in Alaska to negotiate an end to the war in Ukraine.
The prospect of diplomatic progress has been counterbalanced by the possibility of tighter penalties should a peace deal not be reached, as U.S. pressure on Russia intensifies.
ANZ analysts noted: "Reports emerged that the U.S. and Russia are aiming to reach a deal to halt the war in Ukraine. Officials from both sides are working towards an agreement on territories for a planned summit meeting between presidents Trump and Putin."
Broader economic developments and policy moves have also influenced sentiment. 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.
Sentiment was further dampened by weaker activity indicators out of China: 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.
The rout last week left Brent down 4.4% for the week ended Friday, while WTI fell 5.1%, as the market grappled with the competing forces of potential sanction relief and a gloomy demand outlook.