Oil prices fell on Thursday amid expectations that a potential peace agreement between Ukraine and Russia could lead to the lifting of sanctions that have disrupted supply flows. Meanwhile, crude inventories in the United States, the world's top producer, increased.
اضافة اعلانBrent crude futures dropped by 68 cents, or 0.9%, to $74.50 per barrel by 05:15 GMT, while U.S. West Texas Intermediate (WTI) crude fell by 65 cents, or 0.9%, to $70.72 per barrel.
Both Brent and WTI had declined by more than 2% on Wednesday after former U.S. President Donald Trump announced that Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky had expressed a willingness for peace during separate phone calls with him. Trump subsequently directed senior U.S. officials to initiate talks to end the war in Ukraine.
Russia is the world’s third-largest oil producer, and sanctions on its oil exports—imposed due to its invasion of Ukraine nearly three years ago—have helped keep prices elevated.
ANZ Group analysts stated in a note on Thursday that oil prices declined following reports of potential peace talks due to "optimism that risks to crude oil supply may ease." They also pointed out that U.S. and European sanctions had negatively impacted Russia’s production.
"Signs of supply tightening had been pushing oil prices higher in recent weeks," the analysts added, explaining that U.S. sanctions on Russian companies and vessels had worsened the situation.
The rise in U.S. crude oil inventories, in the world’s largest oil-consuming nation, also affected the market. According to the U.S. Energy Information Administration (EIA), crude stockpiles increased more than expected last week.
Inventories rose by 4.1 million barrels to 427.9 million barrels in the week ending February 7, surpassing a Reuters poll forecast of a 3-million-barrel increase.
"This latest drop in crude oil futures comes after a series of inventory builds," said Darren Lim, a commodities strategist at Phillip Nova.
He added that geopolitical developments, such as proposals to end the Ukraine conflict, could put additional pressure on oil prices.
Additionally, Trump’s threats to impose further tariffs on U.S. trading partners weighed on prices, as concerns grew over the potential impact on global economic growth and oil demand.
Trump stated that he would impose reciprocal tariffs by Wednesday evening on any country that levies duties on U.S. imports, raising fears of a global trade war that could accelerate inflation in the United States. – Agencies
