Trump’s Putin pivot sends oil prices sliding

The U.S. president’s turn on Ukraine and Russian oil rattles global markets

Interview requests

Oil markets are tumbling into bear territory, driven by a potent mix of geopolitical upheaval, weakening demand and surging supply. The latest shock came after U.S. President Donald Trump reversed his stance on the Russia–Ukraine war, easing pressure on Moscow and casting uncertainty across global energy markets.

Following a meeting with Russian President Vladimir Putin in Alaska on Aug. 15, Trump abandoned his earlier demand for a ceasefire and is now calling for a full peace deal. This puts intense pressure on Ukrainian President Volodymyr Zelenskiy to concede land—something long demanded by Russia and now backed by the United States. Trump also dropped threats of further sanctions and signalled that countries such as China will not be penalized for importing Russian oil.

Oil prices slipped in early Asian trading on Aug. 18, as markets reacted to Trump’s diplomatic shift and easing concerns about supply disruptions. With Russian crude set to keep flowing freely and no new U.S. penalties on the table, the policy change signalled a loosening of pressure on Moscow. European leaders—including European Commission President Ursula von der Leyen, French President Emmanuel Macron and NATO Secretary General Mark Rutte—have expressed support for Ukraine, but market focus remains on Washington, not Brussels.

Crude futures are down more than 10 per cent this year and are trading in a narrow range. Trump’s escalating trade tensions, especially with China and India, rising output from OPEC+ members and global consumption trends are weighing heavily on prices.

Beyond Russia and Ukraine, broader trade tensions are also weighing on oil markets. India’s position adds further uncertainty. While Trump appears content to let China import Russian oil, India faces a more complex relationship. Trade talks with the U.S. have stalled, and a planned delegation visit has been deferred. At the same time, Indian Prime Minister Narendra Modi is seeking to stabilize ties with both Russia and China. Trump has not ruled out imposing a 25 per cent tariff on Indian exports starting Aug. 27, putting strain on a key buyer of Russian crude and a growing energy power in its own right.

At the same time, long-term demand signals are flashing warning lights. The International Energy Agency (IEA)—an energy watchdog for industrialized nations—is warning of a significant supply glut within months as both OPEC+ (the oil-producing alliance that includes Russia) and non-OPEC production continue to climb while demand lags.

The IEA’s August report cut global oil demand growth to 680,000 barrels per day in 2025—20,000 barrels below July’s estimate. Its 2026 projection is only slightly higher at 700,000 barrels per day. Since January, the agency has slashed its 2025 growth forecast by 350,000 barrels.

OPEC remains more optimistic. It left its 2025 growth forecast unchanged at 1.29 million barrels per day and expects fourth-quarter demand this year to reach 106.36 million barrels per day. For 2026, it nudged its estimate up to 106.52 million barrels. Despite that confidence, government forecasts point to continued weakness.

The U.S. Energy Information Administration predicts Brent crude will fall to US$58 per barrel by the fourth quarter of 2025, down from US$71 in July. It could drop further—to US$50, by early 2026.

For Canada, this is no sideshow. A prolonged price slump would hit Alberta’s resource-dependent economy hard, cutting into royalties, tax revenues and employment. That impact extends across the country, affecting GDP, transfer payments and public services supported by energy wealth.

Trump may view a hasty peace deal and hands-off oil policy as strategic wins, but for energy markets—and countries like Canada that rely on resource exports—the fallout could be lasting and painful.

Toronto-based Rashid Husain Syed is a highly regarded analyst specializing in energy and politics, particularly in the Middle East. In addition to his contributions to local and international newspapers, Rashid frequently lends his expertise as a speaker at global conferences. Organizations such as the Department of Energy in Washington and the International Energy Agency in Paris have sought his insights on global energy matters.