Oil Prices Decline on Hopes of Ukraine-Russia Peace Deal

Oil prices fell on Thursday, with Brent crude down 0.9% at $74.50 per barrel and WTI crude dropping 0.9% to $70.72. The decline followed expectations that a peace deal between Ukraine and Russia could end sanctions on Russian oil, which have supported prices since the invasion nearly three years ago.

Market Reacts to Trump’s Diplomatic Efforts

On Wednesday, U.S. President Donald Trump announced that Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy had expressed a desire for peace. Trump then ordered U.S. officials to begin negotiations to end the war in Ukraine, fueling speculation that sanctions on Russian crude could be lifted.

U.S. Crude Inventories Rise More Than Expected

Adding to oil price pressures, U.S. crude stocks rose by 4.1 million barrels last week, surpassing expectations for a 3-million-barrel increase, according to EIA data. The build signals weaker demand and contributes to the bearish sentiment in the oil market.

Analysts Expect Short-Term Volatility

ANZ analysts noted that oil prices dropped due to “optimism that risks to crude oil supplies would ease.” While U.S. and EU sanctions have recently restricted Russian oil output, a peace deal could reverse those pressures.

Trade War Concerns Add to Oil Market Uncertainty

Trump’s latest threat of reciprocal tariffs on U.S. trading partners also weighed on oil prices. Investors fear that higher tariffs could slow global economic growth, reducing oil demand and putting further downward pressure on crude prices.

Future Outlook for Oil Prices

Oil prices may face further short-term declines as peace talks progress and U.S. crude inventories continue rising. However, geopolitical uncertainty and global economic conditions will remain key factors in shaping the market’s next moves.