By Bloomberg News

Fuel and crude oil storage tanks. Photographer: Goncalo Fonseca/Bloomberg

(Bloomberg) -- Oil drifted lower as investors awaited a face-to-face summit between Donald Trump and Vladimir Putin in Alaska later on Friday, an encounter with the potential to reshape flows from one of the world’s largest producers.

Putin stepped up his charm offensive, praising Trump’s efforts to broker an end to the war in Ukraine. The US president downplayed hopes for a breakthrough in the more than three-year-old conflict, saying there’s a 25% chance the meeting won’t be successful.

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Any signs of progress towards a deal to end the conflict would remove a layer of geopolitical risk from an oil market that’s expected to be heavily oversupplied in the coming months, potentially weighing on prices. Before the meeting was arranged, Trump threatened to place secondary tariffs on Moscow’s largest buyers, putting at risk flows that have stayed robust since the war began.

Russia is the largest crude exporter after Saudi Arabia, and has become reliant on buyers in China and India eager to purchase oil at a discount to international benchmarks.

Trump announced a doubling of tariffs on Indian goods to 50% last week as a penalty for the nation’s purchases of Russian crude, and has also mulled further crackdowns on the so-called “shadow fleet” of tankers that transport Moscow’s supplies. However, he has so far avoided targeting China — possibly because of concerns a total blockade would send oil prices skyrocketing and hurt US consumers.

On Thursday, Trump warned he would impose “very severe consequences” if Putin didn’t agree to a ceasefire. He also said he hoped to use the summit to set up a “quick second meeting” with Ukrainian leader Volodymyr Zelenskiy after being pressed by allies.