Oil prices remained steady on Friday, yet they are on course to break a two-week losing streak as the prospect of swift peace between Russia and Ukraine fades. With no resolution in sight, traders are factoring in a higher risk premium, keeping crude markets on edge.
Market Snapshot: Brent and WTI Hold Ground
Close to 6:30 AM, Brent crude futures dipped slightly by 4 cents to $67.63 per barrel, while West Texas Intermediate (WTI) crude slipped by a marginal 1 cent to $63.51. Both benchmarks, however, registered gains in the previous session, rising more than 1 per cent, reported Reuters. For the week, Brent is up 2.7 per cent, while WTI has advanced 1.1 per cent.
The shift reflects a reversal of the earlier trend, when optimism over a potential peace deal—led by US President Donald Trump—triggered a sell-off in oil markets. That optimism is now waning, as recent developments signal prolonged hostilities.
Conflict Intensifies Despite Diplomatic Efforts
The Russia-Ukraine war, now stretching into its fourth year, shows no signs of abating. On Thursday, Russian forces launched an airstrike near Ukraine’s border with the European Union, while Kyiv claimed to have hit a Russian oil refinery in retaliation.
Despite recent talks between US and Russian leaders—their first in-person meeting since the invasion—progress towards peace has been minimal. Reports indicate that President Vladimir Putin has set stringent conditions: Ukraine must relinquish the entire eastern Donbas region, abandon its NATO aspirations and block Western troops from entering its territory.
President Trump has assured that the US will safeguard Ukraine under any potential peace accord, but Ukrainian President Volodymyr Zelenskiy has rejected any withdrawal from internationally recognised Ukrainian territory.
US Stockpile Data Offers Additional Support
Oil markets also drew support from data indicating robust US demand. Crude inventories fell by 6 million barrels in the week ending August 15, according to the US Energy Information Administration—far exceeding analyst expectations of a 1.8 million-barrel decline.
All Eyes on Jackson Hole for Fed Signals
Investors are now turning their attention to the Jackson Hole economic symposium in Wyoming, where Federal Reserve Chair Jerome Powell is set to speak on Friday. Markets will be watching for clues about a potential interest rate cut next month. Lower rates could stimulate economic activity, boosting oil consumption and lending further support to prices.
With geopolitical tensions mounting and macroeconomic factors in play, crude prices appear set to post their first weekly gain in three weeks, highlighting the market’s sensitivity to both global conflict and economic policy signals.
