Oil prices fell on Wednesday after Russia agreed to U.S. President Donald Trump's proposal that Moscow and Kyiv halt attacks on each other's energy infrastructure, a move that analysts said could eventually pave the way for Russian oil to enter global markets.
Brent crude futures fell 11 cents, or 0.16%, to $69.97 a barrel by 1130 GMT. U.S. West Texas Intermediate (WTI) crude futures fell 12 cents, or 0.18%, to $66.78.
Russian President Vladimir Putin on Tuesday agreed to halt attacks on Ukrainian energy facilities but stopped short of a full 30-day ceasefire that Trump had sought. "Crude prices fell on signs of progress toward a ceasefire deal in Ukraine, coupled with broader market weakness as traders and investors worry about the impact of the tariff war," Panmure Liberum analyst Ashley Kelty said.
"Even if a deal is reached, it will likely be some time before Russian energy exports increase significantly, with the short-term impact being about diverting flows to attract better prices."
Russia is one of the world's top oil suppliers, but its output has been declining since the start of the war, which led to sanctions on Russian energy.
The deal reduces the risk of supply disruptions and increases the chances of a peace that could lead to an easing of energy sanctions on Russia, allowing more supply into the market, said Charalampos Pissouros, senior investment analyst at brokerage XM.
Meanwhile, U.S. tariffs on Canada, Mexico and China have raised fears of a recession, which has also weighed on oil prices as it would impact crude demand. The oil market remains focused on lower prices despite rising tensions in the Middle East, Goldman Sachs analysts said in a note on Wednesday.
Traders are awaiting the outcome of the U.S. Federal Reserve's policy meeting, which ends later in the day.
Interest rate cuts typically boost economic activity and energy demand. The Fed is widely expected to keep its benchmark interest rate unchanged at 4.25%-4.50%, however, amid investor concerns about an economic slowdown due to Trump's tariffs.
Trump vowed to press ahead with his country's offensive against Yemen's Houthis and said he would hold Iran accountable for attacks by the group that have disrupted shipping in the Red Sea.
Meanwhile, Israeli airstrikes on Gaza killed at least 200 people, Palestinian health authorities said, ending a weeks-long ceasefire and raising the risk that oil supplies from the wider region could be threatened.
In the U.S., crude stockpile data painted a mixed picture, with crude stocks rising while fuel supplies fell. (Newsmaker23)
Source: Reuters
