Oil prices saw a decline on Thursday as optimism over a potential peace deal between Ukraine and Russia raised expectations that sanctions disrupting global oil supply could soon be lifted. At the same time, concerns over U.S. President Donald Trump’s planned reciprocal tariffs added to inflation fears, further pressuring prices.
By 0141 GMT, Brent futures were down 55 cents, or 0.73%, to $74.63 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 52 cents, or 0.73%, to $70.85. This followed a more than 2% drop in both benchmarks on Wednesday, triggered by Trump’s announcement of peace discussions between Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy. Trump also instructed U.S. officials to initiate talks aimed at ending the ongoing war in Ukraine.
Sanctions on Russia’s oil exports, which have been in place since the country’s invasion of Ukraine nearly three years ago, have contributed to higher oil prices. Russia, being the third-largest oil producer globally, has seen its output affected by these measures, which analysts at ANZ noted could ease with a potential resolution to the conflict.
“The news of peace talks has led to optimism that risks to crude oil supplies would ease,” ANZ analysts wrote in a note. They also highlighted how U.S. and EU sanctions on Russian oil companies and vessels have played a role in tightening supply, thereby pushing oil prices higher in recent weeks.
However, Trump’s threat of imposing reciprocal tariffs on countries that charge duties on U.S. imports added downward pressure on oil prices. The move heightened concerns of a broader global trade war, which could dampen economic growth and reduce demand for oil.
Additionally, a rise in U.S. crude oil inventories contributed to the bearish sentiment in the market. According to data from the Energy Information Administration (EIA), U.S. crude stocks increased by 4.1 million barrels to 427.9 million barrels for the week ending February 7. This exceeded analysts’ expectations of a 3 million-barrel increase, further weighing on prices.
In summary, oil prices continued to slide due to a combination of factors, including hopes for a peaceful resolution to the Ukraine conflict, the potential for reduced oil supply risks, and the added economic uncertainties driven by Trump’s tariff threats and rising U.S. inventories.
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