Oil prices experienced a slight uptick on Thursday as traders remained cautious ahead of the scheduled US-Russia summit on the Ukraine conflict.

The meeting has sparked speculation about potential changes to sanctions on Russian crude, although concerns over weak demand have kept price increases in check.

Brent crude futures rose by 24 cents, or 0.37%, to $65.87 a barrel, while US West Texas Intermediate (WTI) futures gained 21 cents, or 0.34%, reaching $62.85.

Both benchmarks had hit two-month lows on Wednesday due to bearish supply forecasts from the US government and the International Energy Agency (IEA).

Tensions surrounding sanctions

US President Donald Trump warned on Wednesday of “severe consequences” if Russian President Vladimir Putin does not agree to a peace deal in Ukraine.

While specifics were not provided, Trump has previously hinted at economic sanctions, including potential secondary tariffs on major buyers of Russian crude like China and India, should the summit fail.

Rystad Energy noted that the uncertainty surrounding the US-Russia peace talks is adding a bullish risk premium to the market, as Russian oil buyers may face increased economic pressure.

Head of commodities strategy at ING, Warren Patterson, indicated that if a ceasefire deal falters, the market could see “upside risk.”

He mentioned that while OPEC’s spare capacity and an anticipated oil surplus in late 2025 and 2026 could mitigate the impact of tariffs on India, broader measures affecting major buyers such as China and Turkey would present a more significant challenge. Support from Fed Rate Cut Expectations

Expectations of a potential interest rate cut by the US Federal Reserve in September have also provided some support to oil prices. Traders are nearly certain a cut will occur after July’s inflation data indicated only a moderate increase.

Treasury Secretary Scott Bessent suggested a possible half-point reduction could be considered in light of disappointing jobs data.

The CME FedWatch tool currently reflects a 99.9% likelihood of a quarter-point cut, which typically boosts oil demand.

Rising Inventories and Supply Outlook Caps Gains

However, gains were limited by a surprise increase in US crude inventories, which rose by 3 million barrels in the week ending August 8, according to the US Energy Information Administration.

Additionally, the IEA projected that global oil supply in 2025 and 2026 would grow more rapidly than previously anticipated, driven by higher output from OPEC and its allies, as well as increased production from non-OPEC producers.