By Seher Dareen
LONDON (Reuters) -Oil markets are set for a muted price reaction when they open on Sunday after U.S. President Donald Trump's and Russian leader Vladimir Putin's meeting in Alaska, at which Trump said a fully-fledged peace deal was the aim for Ukraine rather than a ceasefire.
Trump said he had agreed with Putin that negotiators should go straight to a peace settlement - not via a ceasefire, as Ukraine and European allies, until now with U.S. support, have been demanding.
Trump said he
would hold off imposing tariffs on countries such as China for buying Russian oil following his talks with Putin. He has previously threatened sanctions on Moscow and secondary sanctions on countries such as China and India that buy Russian oil if no moves are made to end the Ukraine war.
"This will mean Russian oil will continue to flow undisturbed and this should be bearish for oil prices," said ICIS analyst Ajay Parmar. "It is worth noting that we think the impact of this will be minimal though and prices will likely see only a small dip in the very near term as a result of this news."
The oil market will wait for developments from a meeting in Washington on Monday between Trump and Ukrainian President Volodymyr Zelenskiy. European leaders have also been invited to the meeting, a source familiar with the matter told Reuters.
"Market participants will track comments from European leaders but for now Russian supply disruption risks will remain contained," said Giovanni Staunovo, analyst at UBS.
Brent settled at $65.85 a barrel on Friday, and U.S. West Texas Intermediate at $62.80 - both down nearly $1 before the talks in Alaska.
Traders are waiting for a deal, so until that emerges, crude prices are likely to be stuck in a narrow range, said Phil Flynn, a senior analyst with Price Futures Group.
"What we do know is that the threat of immediate sanctions on Russia, or secondary sanctions on other countries is put on hold for now, which would be bearish," he said.
After the imposition of Western sanctions, including a seaborne oil embargo and price caps on Russian oil, Russia has redirected flows to China and India.
(Reporting by Seher Dareen; editing by Nina Chestney and Jane Merriman)
