Oil Prices Stabilize Amid Signs of Approaching Agreement in Ukraine

SadaNews - Oil stabilized after closing at a month’s low, amid indications that a peace agreement in Ukraine is nearing, a development that could pave the way for lifting restrictions on Russian crude, at a time when a supply glut is expected.

Brent crude traded near $63 per barrel after falling by 1.4% on Tuesday, while West Texas crude remained above $58.

U.S. President Donald Trump stated that "only a few remaining points of contention" exist, and he sent his negotiators for further meetings, while the head of the Ukrainian leadership office said that talks in Geneva have laid a "good foundation" for reaching an agreement to end the war.

A significant portion of Russian oil is subject to severe Western sanctions, with U.S. restrictions coming into effect last week on the country’s largest producers.

Difficulty in Assessing the Impact of Lifting Sanctions on Russia on Prices

However, China, India, and Turkey have been active buyers of discounted Russian oil over the past few years, making it difficult to evaluate the impact of any easing of restrictions on the Kremlin on global prices.

Huang Wanzhe, an analyst at "Dadi Futures," said: "The main question is whether the ceasefire will actually mean lifting sanctions."

He added: "Since this ceasefire agreement is led by the United States, in an optimistic scenario, it is likely that only the U.S. will prioritize the restoration of Russian oil purchases from buyers like India through exemptions or lighter oversight of the sanctions."

Oil has fallen by more than a fifth since mid-June, as the OPEC+ alliance resumed pumping additional barrels into the market, and non-group producers have increased supplies, while consumption remained weak. The International Energy Agency forecasts that supply will exceed demand by a record 4 million barrels per day next year.

In the United States, a report from the American Petroleum Institute showed that U.S. crude inventories declined slightly by 1.9 million barrels last week. Official data is set to be released later on Wednesday.