Aug 22, 2025 (MarketLine via COMTEX) --
There was an overall increase in crude oil prices during the week after no concrete agreement was finalized over a peace deal in Ukraine when US President Trump met Russian President Putin in Alaska. There was a lack of clarity on whether the Russian proposal shared during the meet was acceptable to other negotiating parties. But it seemed like Ukraine was less inclined to agree it in its current form, thereby raising the possibility of the conflict stretching on even longer. However, this meet opened the door for further discussions in the near future, thereby keeping the upside to oil prices in check to some extent. Prices also received some support from hopes of an interest rate cut in the US and a large weekly decline in the countryaEUR(TM)s commercial crude inventory. Nevertheless, sluggish economic growth in Germany and rising US tariffs on India limited the gains in oil prices during the week.
Some key factors that led to changes in crude oil prices this week are as follows:
Oil prices rose on Monday, after the US-Russia summit in Alaska over the Ukraine conflict ended inconclusively last week. Subsequently, the US President met with heads of major European countries, including Ukrainian President Zelenskiy in Washington. During this discussion, he stressed on Ukraine to relinquish its claim over Crimea, Donbas and demands for a NATO membership, to secure a peace deal with Russia. Nevertheless, there remained an uncertainty over acceptance of these terms in Ukraine, potentially creating a scenario in which this conflict stretches even longer. Oil prices dipped on Tuesday, weighed down by prospects of the Ukraine conflict reaching an end soon, which could see all Western sanctions on Russian energy exports lifted. After the meeting of US and European leaders, their representatives were working to set up further round of talks with Russian President Putin that might involve Ukrainian President Zelenskiy as well. Concerns over a potential decline in the US-India trade also contributed to downward pressure on prices, stemming from the US's imposition of substantial tariffs on Indian imports. In a press conference, the US government emphasized that India's purchases of Russian crude oil were indirectly supporting Russia's conflict with Ukraine, despite the fact that Russian energy imports by the European Union and China were significantly greater.Oil prices rose again on Wednesday, buoyed by a weekly fall in the US crude and gasoline stockpiles. According to the US Energy Information Administration (EIA), crude inventory in the country fell by 6 million barrels for the week ending on August 15, 2025. During the same week, gasoline stocks were down by 2.7 million barrels, indicating steady demand for this important fuel amid the summer driving season. However, the demand prospects for US crude were somewhat dented after oil major BP had to scale back operations at Whiting, Indiana refinery to assess for any damages following a severe thunderstorm in the region. Oil prices rose further on Thursday and then remained largely firm on Friday, as countries remained at loggerheads over the terms of a peace deal in the Ukraine conflict. While Russia declined to allow NATO peacekeeping forces in the Ukrainian demilitarized zone bordering Russia, Zelenskiy rejected the proposal to relinquish control over lost territories. Against this backdrop, armed forces of the two countries continued to engage on the front lines. Additionally, Ukraine struck a refinery and an oil pumping station of the Druzhba pipeline in Russia that briefly disrupted exports to Hungary and Slovakia. Russia also launched major air and drone strikes targeting several places across Ukraine. Prices also received some support from hopes of an interest rate cut in the US next month after Jerome Powell, Chair of the Federal Reserve, hinted at such a possibility. However, the gains in prices were somewhat restrained by concerns over the prolonged economic slowdown in Germany – Europe’s largest economy. Government data revealed that its economy contracted on a quarterly basis by 0.3% during April to June 2025.
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COMTEX_468540885/2227/2025-09-04T09:36:21
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