Oil prices fell on Wednesday after Russia agreed to US President Donald Trump’s proposal that Moscow and Kyiv stop attacking each other’s energy infrastructure temporarily, which could lead to more Russian oil entering global markets.
Brent crude futures fell 19 cents, or 0.3%, to $70.37 a barrel by 0420 GMT. U.S. West Texas Intermediate crude (WTI) was down 20 cents, or 0.3%, to $66.70.
Russian President Vladimir Putin agreed on Tuesday to stop attacking Ukrainian energy facilities but stopped short of endorsing a full 30-day ceasefire that Trump hoped for.
“The agreement marks a positive step towards an eventual resolution, with the halt of attacks on Ukrainian energy facilities reducing further oil supply disruption risks and keeping oil prices under some pressure,” said Yeap Jun Rong, market strategist at IG.
Russia is one of the world’s top oil suppliers, but its output has waned since the beginning of the war, which resulted in sanctions on Russian energy.
A potential ceasefire could lead to an easing of sanctions, which might raise oil supply and ease prices, analysts said.
US tariffs on Canada, Mexico and China have raised recession fears, which also weighed on oil prices as that would have a dampening effect on demand for crude.
Oil markets remain focused on price downside despite rising Middle East tensions, Goldman Sachs analysts said in a note on Wednesday.
Read more: Putin agrees to 30-day halt on energy facility strikes but no full Ukraine ceasefire
“Tariff escalation and high spare capacity skew the medium-term risks to our forecast to the downside,” the analysts said.
Trump vowed to continue his country’s assault on Yemen’s Houthis and said he would hold Iran responsible for any attacks carried out by the group that has disrupted shipping in the Red Sea.
Israeli air strikes in Gaza, meanwhile, killed at least 200 people, Palestinian health authorities said, which ended a week-long ceasefire and elevated risks of oil supply being threatened from the broader region.
US crude oil stocks data, meanwhile, painted a mixed picture, with crude stocks rising while fuel inventories fell.
Crude stocks were up 4.59 million barrels in the week ended March 14, market sources said, citing American Petroleum Institute figures on Tuesday. Gasoline inventories fell by 1.71 million barrels and distillate stocks were down 2.15 million barrels, they said.
Official government data is due on Wednesday.
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