Since the outbreak of the Russia-Ukraine conflict, the first presidential meeting between the United States and Russia has taken place, with the main topic being how to end the Russia-Ukraine war. Although the talks themselves may not yield significant progress, the content and the subsequent developments are critically important, including for the direction of crude oil prices.
1. Trump's $64 Price Level
Previously, Trump indicated that he was quite satisfied with an oil price of $64 per barrel, revealing his attitude toward controlling oil prices and his psychological target price. Unless driven by specific political needs or economic collapse, as an oil-producing nation, a price that is too low is not favorable for encouraging domestic U.S. oil producers to increase investment in exploration and production.
From this viewpoint, the $64 “comfortable” price proposed by Trump aligns with U.S. interests. This also suggests that if prices deviate significantly from this level, they tend to be corrected quickly.
For instance, in several cases when prices rose above this threshold, various news rapidly brought them back toward the $64 mark. Therefore, the current technical condition of oil prices is not very effective, and the market closely monitors fluctuations near this $64 price point.
2. The Impact of U.S.-Russia Talks on Oil Prices
Since the outbreak of the Russia-Ukraine conflict, Russia has been under sanctions, with its crude oil exports being forced to trade at a discount. Despite the continued conflict, Russian oil has remained steadily exported at this discounted rate. If the U.S.-Russia talks are successful, sanctions on Russian oil could be gradually lifted, resulting in an increase in Russian oil supply, which in the short term would exert bearish pressure on prices. Recent oil price trends already reflect market expectations along these lines.
However, easing sanctions would also mean upward price adjustments for Russian oil. Unless Russia decides to break the OPEC+ supply agreements, the overall production increase would be absorbed by the market in a relatively short time. After this adjustment period, the oil market would seek a new equilibrium, preventing a significant drop in prices.
Conversely, if the two sides fail to reach an agreement, Trump’s previous threats suggest that the U.S. would tighten sanctions on Russia and impose secondary tariffs on countries buying Russian oil (India is an example). This would further restrict Russian crude exports and reduce supply expectations for the global oil market, thereby lifting prices. Overall, attention should be focused on announcements or news released after the U.S.-Russia meeting scheduled for Friday.
3. Strategy for Crude Oil
To guard against sudden oil price fluctuations that may occur during Friday’s talks, drastic trading moves are not recommended this week. For option traders, placing bets on straddle options (both call and put) is advisable since there is currently no clear short-term directional bias for oil prices, but volatility is expected. Purchasing options is the most prudent approach pending final outcomes from the talks. After the weekend, when the situation becomes clearer and directionality emerges, one can sell short-term options in the opposite direction to capture option premiums, increasing the chances of success.
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