Oil attempted to recover from the steep drop at the start of the Asian session, but as European trading began and the first comments from Trump following Zelensky’s arrival in Washington hit the wires, sellers once again tried to reinforce the downward trend in the price of the key energy commodity.
The renewed decline in oil is largely due to Trump’s relatively warm reception of Putin in Alaska. Ahead of the summit, the market had staged a mild rebound on speculation that the White House might impose sanctions on Russian oil if the talks failed. On the table were sanctions against Russia’s two largest exporters (Rosneft and Lukoil), as well as new tariffs on importers of the commodity.
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Create account Try a demo Download mobile app Download mobile appHowever, escalation did not occur. The declaration of a “productive” meeting eased pressure on the Kremlin’s key revenue stream. Trump not only refrained from imposing additional tariffs on Russia but also backed away from the idea of levying extra duties on China over its imports of Russian oil. For markets, this move reduces fears of greater disruption to global trade—especially after the recent sudden tariff hike on India (to 50%)—since targeting China would have meant breaking the recently announced 90-day extension of the trade truce.
The continuation of the trend will largely depend on the outcome of today’s talks between Trump and Zelensky. The U.S. president has already stated that “Crimea and NATO are not on the table for Ukraine,” a remark welcomed by Russian negotiator Kirill Dmitriev, while at the same time setting a ceiling on Zelensky’s expectations.
Nevertheless, the Ukrainian president has repeatedly stressed he cannot agree to territorial concessions, while Trump appeared to soften his stance, commenting that “Zelensky, if he wants, can keep fighting.” A lack of breakthrough in today’s talks—coupled with Trump’s pullback from sanctions on Russia—should sustain the downward trend in oil, which, all in all, still hurts the Kremlin’s finances.
OIL extends losses by another 0.75% despite an attempted rebound during the Asian session. Buying momentum, however, remained far from convincing, with the contract trading below the shorter EMA30 (light purple) for 11 consecutive days. A key factor for further declines will be a test of support around 63.40. Source: xStation5
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