Oil drops over 1% amid prospects of US easing Russia sanctions

Oil drilling rigs

Oil closed lower today, Aug. 19, amid the possibility that the US could ease sanctions on Russia if it reaches a ceasefire agreement with Ukraine.

Brent crude futures for October delivery fell 1.22%, or 81 cents, to $65.79 a barrel at the end of trading. WTI crude futures for September delivery fell 1.69%, or $1.07, to $62.35 a barrel.

The US intensified diplomatic mediation efforts between Russia and Ukraine to end the war that has been raging for nearly four years.

US President Donald Trump held a summit with his Russian counterpart Vladimir Putin on Aug. 15 to discuss ways to resolve the conflict. He then met with a group of European leaders at the White House on Aug. 18, in the presence of Ukrainian President Volodymyr Zelenskyy.

Trump expressed hope that these talks would lead to a peace agreement, after repeatedly threatening Russia with increased sanctions if it refused to end the war in Ukraine.

Short positions on oil are currently at a record high as traders bet on Russia and Ukraine reaching a ceasefire agreement, Phil Flynn, Market Analyst at Price Futures Group, told Reuters.