Oil climbs after Trump declares energy ceasefire between Russia and Ukraine
Oil prices reversed earlier losses on Monday, rising despite the potential for improved global supplies following U.S. President Donald Trump's declaration of an "energy ceasefire" between Russia and Ukraine. Brent crude futures for December delivery increased 0.69% to $105.44 a barrel, while U.S. West Texas Intermediate futures for November gained 0.54% to $92.35 per barrel. Both benchmarks had previously declined by approximately 1.5% during the session.
Oil prices reversed earlier losses on Monday, rising despite the potential for improved global supplies following U.S. President Donald Trump's declaration of an "energy ceasefire" between Russia and Ukraine. Brent crude futures for December delivery increased 0.69% to $105.44 a barrel, while U.S. West Texas Intermediate futures for November gained 0.54% to $92.35 per barrel. Both benchmarks had previously declined by approximately 1.5% during the session.
The market shift occurred after Ukrainian President Volodymyr Zelenskyy welcomed the proposed ceasefire but warned that Moscow must also comply with the agreement. Trump issued the declaration in a social media statement on Sunday, asserting that both parties had agreed to the terms. He stated that the energy truce was in effect immediately and urged both sides not to violate the agreement.
Prospects for increased Russian energy exports have also risen following remarks by Trump on Friday. He stated that Moscow would supply more than 4 million tons of diesel to the global market under a deal struck with Russian President Vladimir Putin during a phone call.
Diplomatic efforts to de-escalate regional tensions are also underway. According to the Saudi state news agency, Iranian Foreign Minister Abbas Araghchi spoke by phone with Saudi Foreign Minister Faisal bin Farhan bin Abdullah to discuss recent escalations in the region and efforts to address them. Al Jazeera reported that Araghchi indicated Iran was prepared to assist in initiating dialogue between Saudi Arabia and Yemen's Houthis.
Analysts expect oil prices to remain volatile in the near term due to the ongoing U.S.-Iran conflict and potential supply disruptions from Hurricane Isaias. In a Monday note, UOB stated that pressure on oil prices could remain on the upside as Hurricane Isaias strengthened to Category 3 with 120 mph winds approaching the U.S. Gulf Coast, forcing energy producers to curtail offshore output.
UOB added that Houthi missile strikes on Riyadh airport in Saudi Arabia on Saturday, which killed 12 people and injured over 300, have materially elevated Middle East risk premia.