Global oil prices fell on Tuesday, August 19, 2025, amid renewed diplomatic moves by the United States to broker peace between Russia and Ukraine, raising the possibility of easing sanctions on Russian crude and swelling global supply.
According to data from oilprice.com, Brent crude slid by 1.01 percent, or 67 cents, to trade at $65.93 per barrel, while the West Texas Intermediate (WTI) dropped by 1.23 percent, or 78 cents, to $62.64 per barrel as of Tuesday afternoon.
Analysts warn that the decline in oil prices could worsen Nigeria’s fiscal outlook for 2025, threatening to expand the federal government’s budget deficit and increase its reliance on borrowing.
The federal budget was benchmarked at $75 per barrel, but Brent has been trading below that level in recent weeks, further straining government revenue.
The price slump followed U.S. President Donald Trump’s announcement after a meeting with Ukrainian President Volodymyr Zelenskiy and European leaders.
Trump revealed he had also spoken with Russian President Vladimir Putin and was working to facilitate a potential trilateral summit involving the three leaders.
Trump urged Putin and Zelenskiy to demonstrate “flexibility,” reiterating his commitment to accelerate negotiations aimed at ending the war in Ukraine. Zelenskiy described his discussions with Trump as “very good” and confirmed that talks included potential U.S. security guarantees for Ukraine, though details remain unclear.
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Market observers see the diplomatic thaw as a key factor behind the drop in oil prices. Analysts at Commerzbank noted in a report:
“Following yesterday’s meeting between Trump, Ukrainian President Zelenskiy, and several European heads of state and government, there appears to be movement in the negotiations, fueling renewed hopes for an upcoming end to the war. As a result, oil prices are falling again today.”
Suvro Sarkar, lead energy analyst at DBS Bank, added that Trump’s softer stance on secondary sanctions targeting importers of Russian oil has eased fears of supply disruptions, slightly reducing geopolitical risks in the oil market.
Meanwhile, trade flows in Russian crude continue to shift. China has increased purchases of Russia’s flagship Urals crude, taking advantage of discounted prices, while India has slowed imports amid U.S. tariff pressures.
Traditionally, China’s imports have focused on the ESPO grade shipped from Russia’s Far East, while India has been a major buyer of Urals shipped from western Russia. But with Washington tightening tariffs on India, Moscow and Beijing appear to be strengthening their energy ties at India’s expense.
For Nigeria, the fall in oil prices adds pressure to already fragile fiscal conditions. The country’s crude oil output has risen modestly to about 1.5 million barrels per day (bpd) this year, but production remains below the 2025 budget target of 1.78 million bpd. With lower output and declining global prices, fiscal deficits are expected to widen unless production and revenues improve.