Brent oil futures are edging lower as hopes rise for a potential ceasefire in the Russia-Ukraine conflict, according to Commonwealth Bank analyst Vivek Dhar. At midday, Brent prices were around $US65.87 a barrel, marking the lowest price since late May. The dip follows signals that discussions between global leaders could ease tensions in the region.
Dhar highlighted recent diplomatic activity, including meetings between US President Trump and Russian President Putin on August 15, and subsequent talks between US, Ukrainian, and European leaders on August 18. These discussions suggest a possible path toward de-escalation. While progress may be slow given the varying demands of Ukraine and Russia, the market is responding to initial indications of a potential ceasefire.
The implications for oil supply are complex. While a ceasefire could theoretically allow more Russian oil into global markets, Dhar believes Western economies are unlikely to ease sanctions without a comprehensive and enforceable agreement. Of greater importance to oil markets is the enforcement of India’s tariff increase for purchasing Russian oil. US tariffs on Indian imports are scheduled to increase from 25 per cent to 50 per cent from August 27.
Dhar notes that progress in ceasefire talks could raise expectations of reduced secondary tariffs on India, potentially impacting Brent futures through decreased demand for ex-Russian oil. Some Indian refiners have already reduced purchases, contributing to a widening Urals-to-Brent discount for deliveries to India. The analyst maintains a cautious outlook, expecting Brent oil to drift toward $US63 per barrel by the December quarter. Commonwealth Bank is one of Australia’s leading providers of integrated financial services, including retail, business, and institutional banking. The bank also offers funds management, superannuation, insurance, and investment services.
