Oil prices slipped on Tuesday after Ukraine indicated it might support a US-backed framework for a peace deal with Russia. The move raised the possibility that Western sanctions on Russian energy could be relaxed, potentially allowing more Russian crude to enter global markets. This expectation put downward pressure on oil prices.
Brent crude, the global benchmark, fell about 1.4% to US$62.48 a barrel, while West Texas Intermediate (WTI) crude, the US benchmark, dropped 1.5% to US$57.95. These levels were the lowest since October 22, reflecting investor caution amid the news.
Analysts say that if sanctions on Russian energy are lifted, the global oil market could see a supply glut, which tends to lower prices. While the news of possible Ukrainian support for a peace deal sparked a drop, market participants remain cautious. Ukraine and Russia still have key differences to resolve, and uncertainty about the final terms of any agreement is keeping some investors wary.
In addition to supply concerns, oil traders are monitoring global demand signals. Economic factors, such as possible interest rate cuts by central banks, could affect consumption and offset some of the downward pressure from increased supply.
Overall, the oil market is balancing between optimism about a potential end to the war and the realities of ongoing geopolitical tensions. Investors are carefully watching developments in peace negotiations, changes in sanctions, and global economic indicators to gauge where prices might head in the coming weeks.
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