Oil prices fall as traders weigh Russian supply outlook, sanction risks

Published 26/08/2025, 03:10

Investing.com-- Oil prices eased in Asian trading on Tuesday, giving up some of the previous session’s gains, as traders weighed the prospect of additional U.S. sanctions on Russia against signs of progress in peace efforts to end the war in Ukraine.

As of 21:45 ET (01:45 GMT), Brent Oil Futures expiring in October fell 0.5% to $68.46 per barrel, while West Texas Intermediate (WTI) crude futures declined 0.6% to $64.44 per barrel.

Both contracts had risen nearly 2% on Monday after Ukrainian drone strikes on Russian oil and gas infrastructure stoked supply concerns.

Markets assess supply outlook amid geopolitical tensions

The conflict in Ukraine remains the main driver of market sentiment. U.S. President Donald Trump has sought to position himself as a mediator, but last week warned he would impose fresh sanctions on Moscow if no progress was made toward a peace deal within two weeks.

Vice President J.D. Vance said Russia had made “significant concessions,” including security guarantees for Ukraine, though Western diplomats cautioned that Moscow had not committed to a binding framework. 

Trump has floated a trilateral summit with Ukrainian President Volodymyr Zelenskiy and Russian President Vladimir Putin, but no date has been set.

The prospect of a peace agreement has led to concerns over a global oil supply surplus, especially if U.S. sanctions on Russian oil are eased following a deal.

But, oil prices remain supported as early optimism over a potential Russia-Ukraine ceasefire continues to wane, where additional U.S. curbs on Russian oil could further provide a boost.

US to hike tariffs on India this week

In trade developments, the U.S. is set to implement an additional 25% penalty tariff on Indian goods starting August 27, bringing the total tariff to 50%. 

This move is in response to India’s increased purchases of Russian oil. Indian officials have expressed frustration over the tariffs, saying India must defend key interests.

Some Indian oil processors have indicated they will continue buying Russian crude, signaling sustained demand that could help underpin global oil prices.

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