Oil prices saw a slight decline on Wednesday following Russia’s agreement to temporarily cease attacking Ukrainian energy infrastructure. This development, stemming from a proposal by U.S. President Donald Trump, could pave the way for more Russian oil to enter the global market.
By 04:20 GMT, Brent crude futures had dropped 19 cents, or 0.3%, to $70.37 a barrel, while U.S. West Texas Intermediate (WTI) crude was down 20 cents, or 0.3%, at $66.70 a barrel.
Russian President Vladimir Putin confirmed on Tuesday that Moscow would halt its attacks on Ukrainian energy facilities. However, he refrained from agreeing to a full 30-day ceasefire, as advocated by Trump.
Yeap Jun Rong, a market strategist at IG, described the agreement as a positive step toward resolving the ongoing conflict. “The halt in attacks on Ukrainian energy infrastructure reduces the risks of further disruptions to oil supply, thereby keeping some pressure on oil prices,” he said.
Russia, one of the world’s largest oil producers, has seen a decline in output since the war’s onset, compounded by sanctions targeting its energy sector. Analysts suggest that a potential ceasefire could lead to the easing of sanctions, boosting oil supply and potentially lowering prices.
In addition to geopolitical tensions, fears of a global recession, fueled by U.S. tariffs on Canada, Mexico, and China, have further weighed on oil prices. A slowdown in economic activity could dampen crude oil demand, contributing to the downward pressure on prices.
Despite rising tensions in the Middle East, oil markets continue to focus on price declines, according to analysts at Goldman Sachs. “Escalating tariffs and high spare capacity suggest that medium-term risks to our price forecast remain skewed to the downside,” they noted.
Meanwhile, in the Middle East, U.S. President Trump vowed to continue military operations against Yemen’s Houthis and hold Iran accountable for any attacks by the group, which has been disrupting shipping in the Red Sea. Additionally, Israeli airstrikes in Gaza have resulted in at least 200 casualties, according to Palestinian health authorities, ending a week-long ceasefire and raising concerns about further disruptions to regional oil supplies.
On the domestic front, U.S. crude oil stockpiles showed mixed results. Crude inventories rose by 4.59 million barrels for the week ending March 14, according to figures from the American Petroleum Institute. However, gasoline inventories fell by 1.71 million barrels, and distillate stocks decreased by 2.15 million barrels.
The U.S. Energy Information Administration’s official data is set to be released later on Wednesday, offering further insight into the state of the nation’s oil markets.
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