West Texas Intermediate (WTI) crude oil traded flat on Friday, hovering around $63.40 during Asian hours, after two consecutive days of gains. Prices remained steady as optimism over an immediate Russia-Ukraine peace settlement continued to fade, keeping risk premiums intact.
According to Reuters, analysts at ING noted, “It’s proving difficult to arrange a Putin-Zelenskyy summit, while discussions around potential security guarantees are facing hurdles. The less likely a ceasefire becomes, the higher the risk of tougher U.S. sanctions on Russia.”
Market caution deepened following reports of Russian airstrikes near the EU border and Ukrainian strikes on a Russian oil refinery. While Moscow has sought significant concessions, Ukrainian President Volodymyr Zelenskyy has firmly ruled out ceding any territory.
Adding to the geopolitical tension, oil markets may see renewed support as the United States announced a 25% tariff on Indian goods, effective August 27, to pressure New Delhi over Russian crude imports. Crude oil represents nearly 35% of India’s total imports.
On the demand side, the outlook remains clouded by diminishing expectations of a Federal Reserve rate cut in September. Higher borrowing costs weigh on U.S. economic activity—the world’s largest oil consumer—dampening fuel demand.
The CME FedWatch tool shows traders now see a 75% probability of a September rate reduction, down from 82% earlier this week. The shift followed stronger-than-expected U.S. Purchasing Managers’ Index (PMI) data and an uptick in Initial Jobless Claims.
