Zelenskiy Ready to Negotiate, Oil Market Immediately Panicks!
Global oil prices weakened on Thursday after Ukrainian President Volodymyr Zelenskiy agreed to begin work on a peace plan, at the same time that US sanctions against two Russian oil giants were set to take effect on Friday. US West Texas Intermediate (WTI) crude fell for a third session, heading toward the $58 per barrel area, while Brent closed near $63 per barrel.
The peace plan was drafted by the United States and Russia, and Zelenskiy is expected to speak with US President Donald Trump in the coming days. The initial proposal included the transfer of some Ukrainian territory and the lifting of sanctions on Russia. Some European diplomats remain skeptical, given that Russian President Vladimir Putin has often appeared cooperative under pressure. The Kremlin itself is trying to halt US sanctions targeting Rosneft and Lukoil, Russia's two largest oil companies.
If the peace plan does progress and sanctions are lifted, the market could potentially be flooded with additional supply amid projections of a large surplus next year. OPEC+ and other producers, particularly from the Americas, have increased production, leading to this bearish sentiment that has put oil prices on track for an annual decline.
Technically, sanctions against Rosneft and Lukoil could leave nearly 48 million barrels of oil stranded at sea, struggling to find buyers. Several Indian refineries are seeking alternatives after years of enjoying low-priced Russian oil; Reliance Industries has even announced it will stop processing Russian oil at part of its Jamnagar refinery. WTI January contracts fell 0.7% to $58.58 per barrel in the Asian session, while Brent January contracts closed down 0.2% to $63.38 per barrel on Thursday. (asd)
Source: Bloomberg
