Kathrine Frich
Signs of progress in diplomatic talks between Russia and Ukraine have sent oil markets sliding.
Traders are bracing for what a potential peace deal could mean for sanctions, supply flows and global demand at a delicate moment for the energy sector.
Market reaction
WTI crude slipped to around 58 dollars a barrel after another 1.5 percent drop on Tuesday, while Brent closed just above 62 dollars.
As reported by the outlet, these are the weakest levels in four weeks, driven largely by optimism surrounding negotiations.
U.S. President Donald Trump said only a handful of issues remain unresolved and confirmed that
American envoys are preparing for further meetings with both sides. His comments added momentum to expectations that the conflict could be moving toward a settlement.
The possibility of resumed Russian exports immediately reshaped market sentiment.
Risk of oversupply
Analysts cited in the report warn that lifting restrictions on Russian oil could tip the market into oversupply.
Prior to the 2022 invasion, Russia exported roughly eight million barrels per day. Sanctions cut that output by an estimated 20–30 percent, diverting discounted crude largely toward Asian buyers.
If full volumes return to Europe, global supply could rise by more than one million barrels per day at a time when consumption is expanding more slowly.
The International Energy Agency expects demand to grow by about 790,000 barrels per day in 2025, far below the pre-pandemic pace.
U.S. production strain
In the United States, the American Petroleum Institute reported a 1.9-million-barrel draw in inventories last week.
The decline was too small to boost prices, and official federal figures were due on Wednesday.
Shale producers continue scaling back activity as low prices make many projects difficult to sustain.
The number of active rigs has fallen to its lowest point in two years, reflecting the industry’s caution.
Economic impact
Cheaper oil offers relief to households and transport operators, lowering heating and fuel bills.
For import-dependent European economies such as Poland and Germany, weaker prices improve trade balances and ease inflation pressure.
Producers, however, face tightening budgets. Gulf states rely on oil in the 70–80-dollar range to remain fiscally balanced, and Saudi Arabia is weighing deeper OPEC+ reductions.
The report notes that a peace deal would reshape energy flows, expand access to Russian crude and test the resilience of U.S. shale, all while shifting Moscow’s position in global markets.
Sources: Money.pl,
