Oil prices steady, set to break two-week losing streak
Crude prices held flat on Friday but remained on course for their first weekly gain in three weeks as fading hopes of an immediate peace deal between Russia and Ukraine heightened geopolitical risk in energy markets.
Brent crude futures slipped 4 cents to $67.63 a barrel in early Asian trading, while U.S. West Texas Intermediate (WTI) crude edged down 1 cent to $63.51. Despite the marginal decline, both contracts had gained over 1% in the previous session. Brent crude was up 2.7% for the week, and WTI had risen 1.1%, signaling a rebound after two consecutive weeks of losses.Oil Retail Market Grows Triples in 5 Years
Traders have been reassessing risk premiums in the oil market as optimism for a quick resolution to the war between Russia and Ukraine wanes. Earlier, expectations that U.S. President Donald Trump could swiftly broker a peace agreement triggered a sell-off in crude, but recent developments suggest a prolonged conflict. On Thursday, Russia launched an air strike near Ukraine’s border with the European Union, while Kyiv reported it had struck a Russian oil refinery.
Diplomatic channels showed little progress despite last weekend’s first in-person talks between U.S. and Russian leaders since Moscow’s invasion began. Russian President Vladimir Putin was reported to have demanded Ukraine surrender the entire Donbas region, abandon its NATO membership ambitions, and agree to keep Western troops out of the country. Trump, meanwhile, pledged U.S. support for Ukraine in any settlement, while President Volodymyr Zelenskiy rejected any withdrawal from internationally recognized Ukrainian territory.
The intractable positions have prolonged the war, now in its fourth year, maintaining elevated geopolitical risk in global energy supply. Analysts note that Russia remains a major crude exporter, and any escalation in fighting or sanctions could tighten supply, especially as demand indicators in the United States remain strong.
Support for oil prices also came from U.S. inventory data. The Energy Information Administration (EIA) reported a larger-than-expected 6 million-barrel drawdown in crude stockpiles for the week ending August 15, compared with analyst forecasts of a 1.8 million-barrel decline. The sharper fall suggested stronger demand from refiners and consumers, reinforcing bullish sentiment in the market.
Market attention is also turning toward monetary policy signals from the Federal Reserve. Investors are awaiting Fed Chair Jerome Powell’s speech at the annual Jackson Hole conference in Wyoming, where expectations of an interest rate cut next month have been growing. Lower borrowing costs could support economic growth, thereby boosting oil consumption.
Historically, crude prices have responded sharply to both geopolitical tensions and monetary policy shifts. For instance, during past Middle East conflicts, markets priced in significant risk premiums, while accommodative Fed policies in the early 2010s supported higher commodity prices by stimulating global demand. The current combination of geopolitical uncertainty and possible monetary easing mirrors earlier periods of volatility.
Energy analysts caution, however, that while the recent rally marks a pause in oil’s decline, sustained gains will depend on whether military escalation intensifies or peace negotiations stall further. A prolonged standoff between Russia and Ukraine would likely reinforce risk premiums, while any breakthrough in talks could reverse the trend.
In the short term, oil traders remain focused on inventory data, Middle East tensions, and the Federal Reserve’s policy stance. But for now, Brent crude’s rise above $67 a barrel and WTI’s hold above $63 signal that geopolitical risk is once again keeping a floor under prices.
As the conflict drags on, oil prices are expected to remain sensitive to battlefield developments, Western diplomatic moves, and macroeconomic policy shifts, with Brent crude likely to continue reflecting the market’s risk appetite.
