Oil prices advanced on Thursday, August 28, 2025, as geopolitical tensions once again overshadowed fundamentals in the energy market. West Texas Intermediate (WTI) crude rose 0.7% to above $64 per barrel, while Brent crude gained 0.4%. The move reversed earlier declines and reflected renewed concerns about Russian supply disruptions.
The rebound followed comments from German Chancellor Friedrich Merz, who said that a potential meeting between Ukrainian President Volodymyr Zelenskiy and Russian President Vladimir Putin would not take place. Markets had viewed such talks as a possible first step toward easing restrictions on Russian crude exports. With negotiations shelved, traders adjusted expectations for any near-term increase in Moscow’s oil shipments.
Attention also turned to Washington, where President Donald Trump is preparing a statement on Russia and Ukraine. Investors are weighing the possibility that new sanctions could target Moscow’s energy exports more aggressively, raising the risk of further supply constraints.
Meanwhile, Ukraine has escalated military pressure on Russia’s oil sector, ramping up drone strikes against key infrastructure. Over the past month, two refineries were targeted, and tanker-tracking data compiled by Bloomberg showed Russian crude exports slipping last week. These developments highlight the vulnerability of Russia’s energy flows, which remain a critical part of the global supply chain despite sanctions already in place.
The U.S. administration has also taken steps to discourage purchases of Russian crude abroad. White House trade adviser Peter Navarro recently urged India to halt imports, following Washington’s decision to double tariffs on Russian oil shipments to 50%. Any reduction in Indian demand could force Moscow to discount barrels more deeply or find alternative buyers, further complicating the supply picture.
Despite short-term concerns about Russian output, broader fundamentals continue to point toward a weaker market in the months ahead. Analysts expect crude balances to shift into surplus by the end of 2025, as production increases from the OPEC+ alliance and non-OPEC producers outweigh global demand growth.
OPEC+ is scheduled to meet on September 7, though officials have not indicated any immediate plans to cut or adjust production targets. With supply growth already underway, the group faces a delicate balancing act between maintaining market share and stabilizing prices.
Adding to subdued activity, U.S. markets are entering a quiet period ahead of the Labor Day holiday. Thin liquidity has amplified volatility, with relatively small shifts in sentiment causing outsized price moves. Traders appear cautious about taking on new risk until there is clarity from both geopolitical developments and OPEC’s next steps.
For investors, the current environment offers a mixed picture. On one hand, geopolitical risks related to Russia and Ukraine may support periodic rallies in crude prices. On the other, rising global output and surplus forecasts suggest a ceiling on sustained gains.
Small- and mid-cap energy producers with efficient cost structures may remain more resilient if prices soften later in the year, while refiners could benefit from volatile spreads driven by supply disruptions. Commodity-focused investors may find opportunities in short-term volatility, but longer-term positioning will likely depend on how OPEC+ manages supply and whether sanctions meaningfully reduce Russian exports.