Oil falls after Trump declares 'energy ceasefire' between Russia and Ukraine
Brent crude futures for December delivery declined 1.65% to $102.99 a barrel on Monday, while U.S. West Texas Intermediate futures for November dropped 1.92% to $90.09 per barrel. The price movement followed President Donald Trump's announcement that Russia and Ukraine would cease targeting each other's energy infrastructure, a development that raised expectations for improved global supply.
Brent crude futures for December delivery declined 1.65% to $102.99 a barrel on Monday, while U.S. West Texas Intermediate futures for November dropped 1.92% to $90.09 per barrel. The price movement followed President Donald Trump's announcement that Russia and Ukraine would cease targeting each other's energy infrastructure, a development that raised expectations for improved global supply.
In a social media statement, Trump declared that an energy ceasefire is in effect immediately, stating that both parties have agreed to the terms and must not break it. Ukrainian President Volodymyr Zelenskyy responded on social media, stating that Ukraine supports the ceasefire and emphasizing the importance of Russian adherence.
Supply expectations were further influenced by Trump's statement on Friday regarding a separate agreement reached during a phone call with Russian President Vladimir Putin. Under that deal, Russia is expected to supply more than 4 million tons of diesel to the global market. This potential increase in Russian energy exports has contributed to the recent shifts in market sentiment.
Geopolitical developments in the Middle East also factored into the trading session. According to the Saudi state news agency, Iranian Minister of Foreign Affairs Abbas Araghchi spoke by phone with Saudi Minister of Foreign Affairs Faisal bin Farhan bin Abdullah. The discussion focused on recent regional escalations and efforts to address them. Al Jazeera reported that Araghchi indicated Iran was ready to assist in initiating dialogue between Saudi Arabia and Yemen's Houthis.
UOB analysts noted in a Monday note that oil prices are expected to remain volatile in the near term due to the ongoing U.S.-Iran conflict. The firm highlighted that Hurricane Isaias had strengthened to Category 3 with 120mph winds as it approached the U.S. Gulf Coast, forcing energy producers to curtail offshore output. UOB stated that this weather event could keep pressure on oil prices on the upside.
Additionally, UOB pointed to Houthi missile strikes on Riyadh airport in Saudi Arabia on Saturday, which killed 12 people and injured over 300. The firm added that these strikes have materially elevated Middle East risk premia, contributing to the complex environment surrounding energy markets.