“Putin-Biden Meeting” Kicks Off Tomorrow: Analysts Project Two Major Scenarios for Oil Price Impact

U.S. President Trump and Russian President Putin will hold a meeting on the 15th (Friday) in Anchorage, the largest city in Alaska, USA. On Wednesday, Trump threatened that if Putin does not agree to the Ukraine peace process, Russia will face "serious consequences."

Russia is the world's third-largest oil producer. Three and a half years ago, when the Russia-Ukraine conflict broke out, oil prices soared sharply as the market feared disruptions to crude oil supply.

The upcoming "Putin-Trump meeting" tomorrow could influence oil price trends. Analysts have projected two possible scenarios.

1. Reaching a "Constructive Agreement"

Daniela Sabin Hathorn, a senior market analyst at the global online trading platform Capital.com, stated in a report,If the United States and Russia announce a "constructive agreement" to lift some sanctions on Russian oil exports, the market may price in an increase in global supply, leading to a drop in oil prices.。

However, Kevin Book, head of research and managing director at U.S. energy research and consulting firm ClearView Energy Partners, said thatReaching a peace agreement to allow Russian energy products to return to the market will be "very difficult."。

"There are many obstacles on the road ahead, especially the 18th round of EU sanctions and the previous sanctions," Book said. He added that Europe "has the ability to fundamentally rebuild the market — this is their ticket to the negotiating table."

II. The progress of the meeting is not going smoothly.

Another possibility is,The meeting between Trump and Putin did not go smoothly, and then the United States and Europe further escalated sanctions against Russia.。

On Wednesday, Trump stated that if the meeting with Russian President Putin on the 15th goes smoothly, a second meeting will be held soon. The second meeting will include Ukrainian President Zelensky. At the same time, he also said that Russia will face consequences if the conflict does not stop.

On the same day, U.S. Treasury Secretary Janet Yellen also warned in a media interview that if the meeting between Trump and Putin does not go well, the United States may increase sanctions on Russia or impose secondary tariffs.

"If the talks break down or escalate into new sanctions, such as export restrictions or additional penalties on countries trading with Russia (such as India), we could see a significant rise in oil prices," said Hathorn of Capital.com.

ClearView's book states,Trump has indicated that he is open to the extensive use of new restrictions against Russia, so "if the talks break down, there may be further measures."。

He believes that in the event of a breakdown in negotiations, the United States may introduce new measures to target Russia's "shadow fleet," which are tankers used to circumvent Western sanctions.

On Wednesday, Trump stated that his meeting with Putin in Alaska aims to "lay the groundwork" for swift follow-up talks, including with Zelensky. Meanwhile, the Trump administration has downplayed expectations for a rapid ceasefire agreement between Russia and Ukraine twice this week.

Book indicated that the Trump administration has been hinting that Friday's summit is a "first step," although they might be trying to "under-promise and over-deliver." He also emphasized that, at present, it seems difficult for geopolitical news to trigger significant fluctuations in oil benchmarks like Brent crude.

"The market is quite skeptical at the moment," he said. "In the past few years, traders have needed a lot of stimulus to get excited about geopolitical risks. The $13 rise in Brent crude prices during the Iran conflict was short-lived, right? As soon as there are signs of a ceasefire, all the risks disappear from the market as if pulled by gravity."

Book indicated that traders should keep this in mind as they prepare for Friday's meeting. If there is no clear outcome, "we maintain the status quo—this is an adequately supplied oil market where OPEC+ has already significantly increased production."

He also stated, "If there are no events that can affect supply, then you have to make traders believe there are significant political drivers in order to trigger major market fluctuations."

In the view of Goldman Sachs' commodities research team,Friday's "Putin-Trump meeting" will not lead to any significant shift in Russian oil supply.。

The bank believes that even if an agreement is reached, while a lasting peace agreement may lead to the U.S. easing sanctions on Russian oil, it will not result in a significant short-term increase in Russian oil supply. This is because Russian production is currently mainly constrained by OPEC+ quota decisions, insufficient oil investment, and the strengthening of the ruble.

Amid escalating tensions between the US and Russia, although the lack of progress in ceasefire negotiations may trigger new threats of secondary oil tariffs/sanctions, the risk of a large-scale disruption in Russian supplies is limited. This is mainly based on three factors: Russia's massive export volume, the possibility of maintaining demand through deeper price discounts, and key buyers (such as India) continuing to demonstrate a strong willingness to cooperate with Russia on energy.