Oil Edges Lower As Market Ponders Potential Russia-Ukraine Peace Talks

Summary:

Oil prices slipped in early Asian trade on Tuesday as market participants contemplated planned three-way talks among Russia, Ukraine and the U.S. to end the war in Ukraine, which could lead to an end to sanctions on Russian crude.

Brent crude futures fell 7 cents, or 0.11%, to $66.53 a barrel by 0000 GMT. U.S. West Texas Intermediate crude futures for September delivery, set to expire on Wednesday, fell 6 cents, or 0.09%, to $63.36 per barrel.

The more active October WTI contract was down 9 cents, or 0.14%, at $62.61 a barrel.

Prices settled around 1% higher in the previous session.

Following talks with Ukraine President Volodymyr Zelenskiy and a group of European allies in the White House on Monday, U.S. President Donald Trump said in a social media post he had called his Russian counterpart Vladimir Putin and begun arranging a meeting between Putin and Zelenskiy, to be followed by a trilateral summit among the three presidents.

"An outcome which would see a ratcheting down of tensions and remove threats of secondary tariffs or sanctions would see oil drift lower toward our $58 per barrel Q4-25/Q1-26 average target," Bart Melek, head of commodity strategy at TD Securities said in a note.

Zelenskiy described his direct talks with Trump as "very good" and said they had spoken about Ukraine's need for U.S. security guarantees.

Trump has pressed for a quick end to Europe's deadliest war in 80 years, but Kyiv and its allies worry he could seek to force an agreement on Russia's terms.

"A result which would see the U.S. apply pressure on Russia in the form of broader secondary tariffs against Russia's oil customers (as those now faced by India) would no doubt move crude to the highs seen a few weeks ago," Melek added.

Source: Reuters

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James Whitman

Economic

Political

Brazil is forcefully rejecting Washington’s allegations of unfair trade practices, describing an investigation launched by the US Trade Representative into the matter as an illegitimate use of unilateral US trade law.

In a 91-page response to the so-called Section 301 probe, Brazil said its digital, intellectual property, ethanol and environmental policies are consistent with international trade rules. Brazil’s comments were submitted to the USTR earlier on Monday and published on its website a few hours later.

Launched in July, the investigation is seen as an attempt to justify the 50% tariffs imposed by President Donald Trump on all Brazilian exports to the US, excluding some 700 items ranging from aviation parts to select agricultural exports.

Trump has linked the penalties to Brazil’s prosecution of former President Jair Bolsonaro, portraying the case as a US national security concern. Brazil countered that the tariffs are political in nature and not grounded in economic harm to American firms.

In its filing, the government stressed the US has consistently run a trade surplus with Brazil — $29.3 billion in 2024 — and that American firms already enjoy broad access to the Brazilian market. More than 70% of US exports enter duty-free, while Brazil’s fast-growing electronic payments system, Pix, is open to global platforms such as Google Pay and WhatsApp. Officials also pointed to joint enforcement efforts on corruption and intellectual property, citing US recognition of Brazil’s progress in reducing patent backlogs and cracking down on piracy.

The submission also devotes significant attention to environmental concerns, asserting that deforestation has dropped by nearly 50% since 2023 thanks to stricter enforcement of the Forest Code and satellite monitoring systems. It argued that Brazil’s major US-bound farm exports — coffee, orange juice, sugar and tobacco — are not related to Amazon clearing.

On ethanol, Brazil contrasted its own 18% tariff with Washington’s 52.5% levy on Brazilian shipments, accusing the US of protecting subsidized corn-based ethanol while blocking sugarcane-based fuel that meets California’s low-carbon standards.

“Unilateral measures under Section 301 risk undermining the multilateral trading system and could have adverse consequences for bilateral relations,” the filing said.

President Luiz Inacio Lula da Silva has promised to keep channels of dialogue open while taking the dispute to the World Trade Organization. He has also rolled out domestic credit lines to cushion exporters from the sudden tariff shock.

Source: Bloomberg

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James Whitman

Economic

Political

Russia-Ukraine Conflict

US President Donald Trump's meeting with a coterie of European leaders, including Ukraine President Volodymyr Zelenskyy, did not yield any immediate progress on peace in the Russia-Ukraine conflict on Aug. 18, with the prospect of potential secondary sanctions on crude purchases from Russia undecided and Republicans in the US Senate still pushing a harsh sanctions bill on buyers of Russian crude.

Trump has repeatedly threatened the largest buyers of Russian crude with sanctions if a deal to end the war in Ukraine is not reached. On Aug. 6, Trump issued an executive order raising tariffs on US imports from India from 25% to 50%, in response to what Trump described on Truth Social as India's "massive" purchases of Russian crude.

After the White House meetings, US Senate Majority Leader John Thune, Republican-South Dakota, wrote in a social media post that the Senate would pass its own sanctions package if the talks fail to lead to an agreement.

"As peace talks continue today in Washington, the US Senate stands ready to provide President Trump any economic leverage needed to keep Russia at the table to negotiate a just and lasting peace in Ukraine," Thune said.

The bipartisan Senate bill, the Sanctioning Russia Act of 2025, would impose a 500% duty on all goods or services imported by the US from any country that "knowingly sells, supplies, transfers, or purchases oil, uranium, petroleum products, or petrochemical products that originated in the Russian Federation."

Still, as long as negotiations continue, the US is unlikely to levy harsher penalties on Russia's crude buyers, Rachel Ziemba, Senior Advisor at Horizon Engage, said.

"While negotiations are in play, there is no prospect of new sanctions from the US that might reduce supplies of Russian energy," Ziemba said. "This was signaled by Trump after the Alaska meeting. Trump is unlikely to use either tariffs or sanctions until he believes that Putin is blocking an agreement."

India flow continues

India remains the largest buyer of Russian crude. On Aug. 18, India's state-run refiner India Oil Corp. said in an earnings call that it had continued its purchases despite sanctions and narrowing discounts for heavy Urals supply.

Between April and June, IOC used Russian crude to satisfy a quarter of its feedstock needs. "We are continuing to buy Russian crude in the ongoing quarter," IOC Director of Finance Anuj Jain said on the call. In 2026, the EU will impose an import ban on products made from Russian crude oil.

Platts, part of S&P Global Commodity Insights, assessed Urals crude at a $2.74/b discount to the Dubai benchmark on Aug. 15, reflecting a 76-cent wider discount for the grade than the previous week. However, the delta remains far below recent levels of over $5/b in January.

India, China and Turkey are the largest importers of Russian crude. In July, India received 1.7 million b/d, China received around 1 million b/d and Turkey received around 400,000 b/d, according to S&P Global Commodities at Sea data. Trump's additional tariffs on Indian goods, effective Aug. 27, combined with new EU policies targeting refined products made from Russian crude, are already impacting flows, CAS said on Aug. 14 in its Weekly Crude Oil Report.

On Aug. 18, White House trade advisor Peter Navarro wrote that India was "cozying up to both Russia and China," and said if "India wants to be treated as a strategic partner of the US, it needs to start acting like one."

"An outcome which would see a ratcheting down of tensions and remove threats of secondary tariffs or sanctions would see oil drift lower toward our $58/b average target," TD Securities Head of Commodity Strategy Bart Melek said. "In sharp contrast, a result which would see the US apply pressure on Russia in the form of broader secondary tariffs against Russia's oil customers (as those now faced by India) would no doubt move crude to the highs seen a few weeks ago.

No agreement

The tone of Trump's meeting with Zelenskyy marked a contrast from their previous meeting in March, when an Oval Office press conference descended into an argument. The two met for several hours in the East Room of the White House on Aug. 18, per reports, after Trump's meeting with Russian President Vladimir Putin in Alaska on Aug. 15. Both pressed for a trilateral meeting of the US, Ukraine and Russia.

Trump continued to push back against reporters' questions that he had given Putin a diplomatic victory by hosting the Russian President in Alaska, while pledging support for Ukraine without specific defense guarantees. While Trump insisted Europe would be the first line of defense against further Russian aggression, the US would "help them out," Trump said.

"There'll be a lot of help when it comes to security," Trump said.

The crude futures market settled slightly higher on the day. NYMEX September WTI settled 62 cents higher at $63.42/b, and ICE October Brent climbed 75 cents to $66.60/b.

No agreement was reached, and the prospect of sanctions remained unknown.

"It's too early to talk substantially about sanctions relief, but I wouldn't see much more fuel production coming from Russia any time soon," Ziemba said. "Sanctions did more to cap new production than to reduce current volumes, although Ukrainian drone attacks on refineries have reduced some volumes. Overall, there are many questions whether sanctions will just be suspended or lifted in the case of any longer-lasting agreement."

Source: S&P Global Platts

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Political

US President Donald Trump called Vladimir Putin and urged the Russian leader to begin making plans for a summit with Volodymyr Zelenskiy, after meeting the Ukrainian president and European leaders at the White House on Monday.

The proposal — which Trump pitched as a one-on-one summit between Ukraine and Russia’s leaders that would be followed by a trilateral gathering involving all three — represented the latest turn in Trump’s push to broker a quick end to a conflict that has lasted over three years.

But Russian presidential aide Yuri Ushakov indicated only that Trump and Putin had discussed direct talks. That left uncertain whether Putin had agreed to the idea — and if the rosy language emanating from Washington represented an actual breakthrough toward peace or simply a strategic reunification by Ukraine and its allies.

“I called President Putin, and began the arrangements for a meeting, at a location to be determined, between President Putin and President Zelenskyy. After that meeting takes place, we will have a Trilat, which would be the two Presidents, plus myself. Again, this was a very good, early step,” Trump wrote in a social media post.

Trump acknowledged a time and location for a gathering had not been set, adding that US Vice President JD Vance, Secretary of State Marco Rubio and special envoy Steve Witkoff would work to coordinate the possible meeting.

Still, the developments suggested that the leaders of Ukraine and top European nations had largely succeeded in convincing Trump to maintain their approach to possible negotiations with Putin.

Zelenskiy said he was pleased Trump had agreed to two key asks: participating in security guarantees as part of any peace deal and reserving discussion of territorial exchanges for direct talks with Putin. Trump also said that he may be able to convince Russia to release as many as a thousand prisoners as a show of good faith, though that push was not mentioned in his or the Kremlin’s readout of the call with the Russian leader.

Still, Monday represented a reversal of fortune for Kyiv just days after Trump in Alaska said the onus to end the conflict rested with Ukraine. In Washington, the leaders — who have often struggled to work harmoniously since Trump’s return to power — spent the afternoon praising each other and underscoring their unity.

“It could have gone differently but my expectations aren’t only met but exceeded when it comes to today’s meeting,” German Chancellor Friedrich Merz said following the meeting.

A possible Putin-Zelenskiy summit could take place within two weeks, Merz told reporters, adding that European leaders planned additional internal consultations on Tuesday. Zelenskiy told reporters it was his best meeting yet with Trump.

Monday’s meeting at the White House also included French President Emmanuel Macron, UK Prime Minister Keir Starmer, Italian Prime Minister Giorgia Meloni, European Commission President Ursula von der Leyen, NATO Secretary General Mark Rutte and Finnish President Alexander Stubb.

“During the meeting we discussed Security Guarantees for Ukraine, which Guarantees would be provided by the various European Countries, with a coordination with the United States of America,” Trump said. “Everyone is very happy about the possibility of PEACE for Russia/Ukraine.”

Ukraine proposed buying $100 billion in American weapons and another $50 billion deal to produce drones with Ukrainian companies, with financing provided by Europe, the Financial Times reported on Monday. Trump publicly said he had convinced Putin that allowing allied security deals would be necessary for a peace deal, and indicated that he was interested in continuing to sell Kyiv weapons.

Trump told reporters during the meeting that “the European nations are going to take a lot of the burden and the US would “help them and we’re going to make it very secure.”

The tone between Trump and Zelenskiy was notably improved from the Ukrainian president’s last visit to Washington in February, which erupted into a bitter public clash with Trump and briefly led to the US halting military support. Zelenskiy repeatedly thanked Trump, following criticism from Vance six months ago that he was insufficiently grateful for American military and financial aid.

Zelenskiy cast his direct talks with Trump as a “very good conversation” and the “best one” so far and indicated that the discussions about territory might take place if he meets with Putin.

“What is very important that all the sensitive things, territorial, et cetera,” Zelenskiy said. “We will discuss on the level of leaders during trilateral meeting.”

This time, Zelenskiy arrived at the White House donning a jacket after Trump allies criticized the war fatigues he wore to his last sit-down with the US president.

“It’s the best I have,” Zelenskiy said, referring to his outfit, to which Trump replied, “I love it.”

Show of Force

European leaders are determined not to leave a positive outcome to chance. They arrived at the White House in a show of diplomatic force behind Ukraine, determined to secure its territorial integrity and obtain ironclad security assurances from Washington.

Starmer, at the beginning of the broader meeting, said that if the group could ensure progress on “security guarantees” and a “trilateral meeting of some sort to bring some of the difficult issues to a head, then I think today will be seen as a very important day.”

Trump has accelerated his push to secure a quick deal to stop Russia’s invasion that has persisted despite months of US diplomatic efforts and his campaign-trail vow to end it on his first day in office.

On Monday, he said he remained convinced that a “deal was within reach,” that Putin was genuine about seeking peace, and that the leaders would “come to a resolution today, I think, on almost everything.” Trump predicted that the world would know within a week or two “whether or not we’re going to solve this or is this horrible fighting going to continue.”

Despite the stakes, the leaders seemed largely jovial. Trump praised the Europeans for their summertime tans, chatted about golf, and was caught on a hot mic polling the group on whether they wanted to take questions from the media.

But even among the bonhomie, the risks for Ukraine have grown even more intense. Trump after meeting Putin backed off his threat of more sanctions on Moscow and dropped demands for a ceasefire as a condition for further talks, aligning himself with the Kremlin’s position that negotiations with Ukraine should focus on a long-term settlement.

The US president Monday reiterated his claim that Zelenskiy could end the war, raising the prospect of Kyiv being forced into making unpalatable territorial concessions.

“I don’t think you need a ceasefire,” Trump said. “We can work a deal where we’re working on a peace deal while they’re fighting.”

Zelenskiy said Ukraine would need “everything” from the US and its allies — including weapons and security guarantees — to be able to strike a deal. He cited a program to provide Patriot air defense batteries — paid for by European allies — to the country as Russia ramps up missile and drone attacks, offering his thanks to Trump.

Tense Negotiations

The mood going into the meeting was tense following Trump’s summit with Putin, whose full-scale invasion of Ukraine has left Europe facing its deadliest conflict in decades.

In his calls with European leaders after the Alaska summit, Trump said Putin wants Ukraine to cede control of its entire Donbas region of the Donetsk and Luhansk provinces, renewing earlier demands. That would hand Russia a victory it has been unable to achieve militarily since fighting first erupted in 2014, and in an area where Ukraine retains heavily-fortified defenses.

Russia would also halt advancing its claims over the parts of Ukraine’s Zaporizhzhia and Kherson regions that it doesn’t now control, effectively freezing the battle lines at current positions. The Kremlin could also potentially withdraw troops from areas of northeastern Ukraine near the Russian border where its forces control only small pockets of land.

That raises the prospect that the “land-swapping” Trump has teased as part of any deal will be lopsided in Putin’s favor by giving him control of areas beyond what he’s seized, offset by modest concessions of land that had been Ukraine’s anyhow.

Russia, meanwhile, has continued to make slow but steady advances in eastern Ukraine. Hours after Zelenskiy arrived in Washington, Russian attacks on the Ukrainian cities of Kharkiv and Zaporizhzhia killed at least 10 civilians, including two children, and injured dozens, according to local authorities.

Source: Bloomberg

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Manuel

Cryptocurrency

Circle’s upcoming Arc blockchain will debut with direct institutional access through Fireblocks, positioning the stablecoin issuer for a stronger foothold as competition in the sector accelerates.

New York–based Fireblocks, which provides custody and tokenization infrastructure to more than 2,400 banks, asset managers, and fintech firms, confirmed it will support Arc from launch.

The early integration marks a departure from the usual practice of adding new blockchains after their ecosystems mature. Solana, for example, launched in 2020 but was not integrated into Fireblocks until late 2021.

Circle plans to open Arc’s public testnet this fall, with a full launch expected before the end of the year. The firm touts Arc as a layer-1 blockchain purpose-built for “stablecoin finance,” offering settlement and compliance features tailored for institutional participants.

Circle’s expansion

The launch follows significant milestones for Circle in 2025. On June 5, the company raised $1.05 billion in its IPO, the first by a stablecoin issuer. Shares opened at $69 and peaked at nearly $299 in July before settling around $145 in mid-August.

In its first quarterly earnings report as a public company, Circle reported $658 million in revenue for the second quarter, a 53% increase from a year earlier. Circulation of its USDC stablecoin rose 90% in the same period to $61.3 billion, climbing above $65 billion in early August.

Circle has also rolled out the Circle Payments Network to expand its settlement infrastructure, while U.S. regulators advanced clarity on stablecoins with the passage of the GENIUS Act in July.

Intensifying competition

The broader stablecoin market has grown to roughly $277 billion, up from $254 billion at the start of July. While USDC represents about a quarter of the fiat-backed market, rival Tether maintains a dominant market share of over 60%.

Tether reported $5.7 billion in second-quarter profit, a 277% jump from the previous year, largely derived from earnings on its $127 billion in short-term U.S. Treasurys. The position makes it one of the largest private holders of U.S. government debt, surpassing countries such as South Korea and the UAE.

Arc’s debut with Fireblocks aims to ensure Circle’s institutional partners can participate from the outset, reflecting the company’s strategy to strengthen USDC’s role as regulatory clarity and competition reshape the stablecoin landscape.

Source: Cryptoslate

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Economic

Commodity

Brazil's Petrobras is leaning toward corn as the raw material for a renewed foray into ethanol, potentially sidelining sugarcane and beleaguered sugar producer Raizen, three Petrobras sources familiar with the matter said, citing preliminary evaluations.

Energy company Petrobras, majority-owned by Brazil's government, has previously said its potential return to ethanol would involve buying minority stakes in other companies, similar to past investments.

While sugarcane ethanol has not been definitively ruled out, corn ethanol is gaining favor in Petrobras, the sources told Reuters over the weekend, citing falling production costs driven by corn crop growth and rapid expansion in the industry. Sugarcane ethanol output, however, has stagnated amid competition for the raw material from the sugar industry.

Petrobras is also eyeing increased corn output in Brazil's northern regions, where ethanol supplies are low but corn production is rising, the sources said.

"We're closer to corn than cane. The outlook is better. We're talking to several corn producers," one of the sources said, without naming any companies that Petrobras was talking to.

Petrobras declined to comment when contacted through its press office.

Two other Petrobras sources said discussions about re-entering the ethanol sector remain in early stages.

"The return to ethanol is certain, but there's nothing concrete with anyone," one of those sources said, warning to expect delays to any eventual deal.

The company sources spoke on condition of anonymity because they were not authorized to speak to the media.

Raizen, a joint venture between Cosan and Shell that produces sugar and sugarcane ethanol, was hit by bad news last week when it reported a swing to a first-quarter loss and mounting net debt.

On Monday, Raizen shares rebounded from a 16% drop last week, fueled by reports over the weekend suggesting that Petrobras may be considering a stake in the company.

Raizen said it would not comment on the matter when asked about those reports.

"They want to sell to us, but talks haven't even started here," one of the Petrobras sources said, referring to Raizen.

Source: Reuters

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Economic

Central Bank

Wall Street will be listening closely to Federal Reserve Chair Jerome Powell's speech Friday at the Jackson Hole economic policy summit, where he could signal whether the central bank is ready to cut borrowing costs at its next meeting in September.

Powell is scheduled to deliver a speech entitled "Economic Outlook and Framework Review" at 10 a.m. Eastern Time. The talk could shed light on how the Fed chief is thinking about the central bank's battle to bring down inflation, and whether he thinks the Fed is ready to cut its benchmark fed funds rate from its current range of 4.25% to 4.5%, a level he and other Fed officials consider high enough to "moderately" weigh on economic growth and put downward pressure on inflation.

In recent years, Powell has used the annual Jackson Hole speech to signal major changes in monetary policy. In 2024, he confirmed the Fed was about to cut rates for the first time in more than a year, after holding the Fed funds rate high to stamp out a post-pandemic wave of inflation. This time, Powell could use the summit to signal whether the Fed is ready to resume rate cuts for the first time since December.

Powell may also shed light on how he views the Fed's current dilemma. The central bank is tasked with using monetary policy to keep inflation low and employment high. But lately, both of those economic indicators have gone in the wrong direction after President Donald Trump launched his unprecedented campaign to raise import taxes.

Experts expect the speech to go one of at least three ways:

Signal A Rate Cut Is Coming

Powell could use the speech to signal that the Fed will cut interest rates soon, possibly when its policy committee announces its next meeting in September. Financial markets were pricing in an 83% chance of a rate cut as of Monday afternoon, according to the CME Group's FedWatch tool, which forecasts rate movements based on Fed funds futures trading data.

Powell and other Fed officials have voiced concerns that the recent slowdown in the job market could turn into a more serious wave of unemployment. Those fears were supercharged earlier this month by a Department of Labor report that showed job growth unexpectedly ground to a halt this summer.

"With the labor market already near the limit of what could be called maximum employment, we suspect that weak job growth and concern about further downward revisions and downside risks have already convinced the Fed leadership to resume rate cuts," David Mericle, chief U.S. economist at Goldman Sachs, wrote in a commentary.

Throw Cold Water On Hopes For a Cut

On the other hand, Powell could use the opportunity to remind everyone that the Fed's other economic nemesis, inflation, is far from vanquished, making him reluctant to cut interest rates. Recent reports indicate that tariffs are showing up on store shelves, and, ominously, in wholesale prices. That's fueled concerns about a resurgence of inflation, which is still running above the Fed's goal of a 2% annual rate.

Given the alarming inflation data, market participants may be too optimistic about a September rate cut. Economists at Brean Capital Markets, John Ryding and Conrad DeQuadros, wrote in a commentary that Powell may seek to curb their enthusiasm.

"Powell may not want to say that a cut is off the table on September 17, but he needs to say something like: 'At this point, there are some discomforting readings on inflation that are inconsistent with the attainment of the 2% inflation target and based on the evidence to date, I am not inclined to support a rate cut at the next FOMC meeting,'" they wrote.

Stay Noncommittal, Wait For More Data

With data pulling the Fed in both directions, Powell may be reluctant to signal a strategy just yet, especially since one more round of major economic indicators is due before the FOMC makes its monetary policy decision.

"If Chair Powell carves out part of the speech with an update on the outlook for policy, we expect he remains data dependent," economists at UBS led by Jonathan Pingle wrote in a commentary. "We doubt he commits to a September rate cut specifically."