Oil prices stabilise amid US-China trade truce extension and awaited US-Russia talks

Oil prices saw modest gains on August 12 as optimism over a trade truce between the United States and China helped stabilise market sentiment, easing fears of a prolonged economic slowdown. Brent crude futures rose by 26 cents, or 0.39 per cent, to $66.89 per barrel, while US West Texas Intermediate (WTI) crude climbed 22 cents, or 0.34 per cent, to $64.18 a barrel. The market was buoyed by news that US President Donald Trump had extended the tariff truce with China by another 90 days, postponing the implementation of higher tariffs on Chinese goods. This move calmed concerns that a renewed trade war could disrupt global economic growth and, in turn, dampen oil demand. Retailers in the US were particularly relieved as the decision allows for smoother preparations for the upcoming holiday season.

US-Russia talks over Ukraine and potential sanctions

Another focal point for the oil market this week is the meeting between US President Donald Trump and Russian President Vladimir Putin, scheduled for Friday in Alaska. The summit is expected to center around the ongoing war in Ukraine, with the potential for a ceasefire deal. The outcome of the talks could have significant implications for the oil market, especially as Washington continues to pressure major Russian oil buyers such as China and India.

Trump had previously threatened to impose secondary sanctions on Russia’s oil customers if the conflict persists. Any peace deal between Russia and Ukraine could reduce the risk of disruptions to Russian oil exports, which have been a major concern for traders since the war’s onset. A de-escalation in the conflict could lead to a normalisation of oil supplies from Russia, potentially stabilising global crude markets.

US inflation data and future interest rate cuts

Investors are also closely watching the release of US inflation data later today, which could provide hints on the Federal Reserve’s future interest rate decisions. Any indication that the Fed might cut rates in the near future would likely support crude prices, as lower interest rates tend to boost demand for oil. In the broader market, oil prices have been under pressure in recent months, with crude prices falling more than 10 per cent this year due to concerns about global oversupply and slowing economic growth. Traders are hoping that geopolitical developments, particularly the US-Russia talks, could offer some relief to the market in the near term.

(With inputs from agencies)