Why the Trump-Putin-Zelensky Meeting is Dragging Down Gas and Freezing Oil: Markets Don’t Believe in Peace but See Something Else (August 2025)
- How Did Gas Prices Plunge to 13-Month Lows?
- Why Is Oil Stuck in a Bearish Trap?
- Are Markets Really Betting on Peace?
- What’s Next for Energy Markets?
- Q&A: Your Burning Energy Market Questions
The recent diplomatic thaw between the U.S., Russia, and Ukraine has sent shockwaves through energy markets—but not in the way many expected. While hopes for peace remain slim, investors are reacting to the reduced risk of sanctions and supply disruptions. Gas prices have hit 13-month lows due to overflowing inventories and weak Asian demand, while oil faces a structural surplus as OPEC+ and the U.S. ramp up production. Here’s why traders are betting on stability rather than peace.
How Did Gas Prices Plunge to 13-Month Lows?
Europe’s gas storage is now 74% full—a stark contrast to last year’s 86% but a massive recovery from April’s crisis levels below 35%. A mild winter and sluggish Asian demand created a "wave of abundant supply," as the International Energy Agency noted. "The market is quite constrained," says James Waddell of Energy Aspects, pointing to Europe’s strategic LNG stockpiles. The Dutch TTF benchmark reflects this: it’s at its weakest since July 2024. Funny how a few months of diplomatic small talk can do what a year of sanctions couldn’t—calm the nerves of energy traders.
Why Is Oil Stuck in a Bearish Trap?
OPEC+ just flooded the market with 547,000 extra barrels per day in August, bringing total output hikes to 2.2 million barrels since spring. Combine that with disappointing Chinese demand and Trump’s sudden aversion to Russian oil sanctions, and you’ve got Goldman Sachs predicting $60/barrel by year-end. "The Trump-Putin meeting was pure theater," admits Julius Baer analysts, "but the real plot twist is Washington’s retreat from aggressive tariffs." Remember those proposed secondary sanctions threatening India? Poof—gone like a Moscow snowstorm in May.
Are Markets Really Betting on Peace?
Not a chance. ING analysts put it bluntly: "Investors aren’t pricing in Ukrainian territorial concessions—they’re celebrating the lower odds of market-crushing sanctions." Russia’s economy is already teetering near recession (their own minister admitted it), making energy its last lifeline. As Capital Economics notes, even if peace broke out tomorrow, "the supply implications WOULD be minimal." The real takeaway? Geopolitical risk premiums are evaporating faster than Arctic permafrost.
What’s Next for Energy Markets?
Brace for structural surpluses. Qatar and U.S. LNG exports are booming, with prices projected to sink to €25/MWh by 2026. Oil faces a 2-million-barrel daily glut, per S&P Global—a scenario originally forecast for 2026 but accelerated by Saudi Arabia’s strategic pivot. One wildcard: if China’s economy suddenly revives, all bets are off. But with tariffs biting and property markets wobbling? Don’t hold your breath.
Q&A: Your Burning Energy Market Questions
How low can European gas prices go?
With storage filling faster than expected and LNG tankers queuing at ports, analysts see TTF testing 2024’s lows of €22/MWh if winter demand disappoints.
Will Russia restart gas flows to Europe?
Unlikely—even with diplomacy warming up, Europe’s infrastructure has pivoted decisively toward LNG. As one BTCC energy analyst joked, "Nord Stream 2 isn’t just offline; it’s become a very expensive coral reef."
Could oil snap back above $80?
Only with a "triple shock"—OPEC+ cuts, U.S. production issues, and a Chinese stimulus miracle. Right now, the market’s betting on the opposite trifecta: more barrels, fewer sanctions, and stagnant demand.
