Oil prices retreat ahead of crucial Trump-Putin meeting

Investing.com -- Oil prices fell Friday, handing back some of the previous session’s sharp gains as focus remained squarely on how an upcoming meeting between U.S. and Russian leaders will affect global supply.

At 08:15 ET (12:15 GMT), Brent Oil Futures for October edged 0.4% lower to $66.58 a barrel and West Texas Intermediate crude futures fell 0.5% to $63.64 a barrel. 

Both contracts jumped nearly 2% on Thursday, but were still set to post to a largely flat week.

Trump-Putin Alaska meeting eyed

U.S. President Donald Trump and Russian counterpart Vladimir Putin are set to meet in Alaska later in the session to discuss terms for a ceasefire with Ukraine. 

Trump on Wednesday threatened “severe consequences” if Putin did not agree to peace, with the U.S. president having earlier threatened steep tariffs on major buyers of Russian oil, namely India and China. 

Trump’s follow-through on his threat, combined with any additional restrictions targeting Russia’s oil industry, could further tighten global supply, adding upward pressure to crude prices. 

Analysts say stricter curbs on Moscow’s energy exports would likely exacerbate existing supply constraints, particularly in Europe and parts of Asia that still rely heavily on Russian crude and refined products.

The market impact could swing sharply in the opposite direction if the U.S. moves to ease sanctions or offer limited relief in exchange for concessions from Moscow.

"The expected oil surplus through the latter part of this year and 2026, combined with OPEC spare capacity, means that the market should be able to manage the impact of secondary tariffs on India. But things become more difficult if we see secondary tariffs on other key buyers of Russian crude oil, including China and Turkey," said analysts at ING, in a note.

Economic data in focus

Data on Friday showed that Japan’s economy expanded more than expected in the second quarter, as exports and capital spending remained resilient despite U.S. tariff pressures during the period.

The stronger-than-expected outcome may bolster the case for the Bank of Japan to consider further tightening.

In China, data showed that industrial production in July fell short of expectations as overseas demand waned following earlier front-loading due to U.S. tariffs.

Retail sales figures from the world’s second-largest economy also came in below expectations in July amid weakness in consumer spending.

There is also data from the U.S. to digest, including July retail sales, with traders still looking for the Federal Reserve to cut interest rates next month, even in the wake of Thursday’s hotter-than-expected U.S. producer price index.

Ayushman Ojha contributed to this report