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Oil Prices Drop Amid Prospects of Russia-Ukraine Peace Deal

2/13/2025
Oil prices took a hit as hopes for peace between Russia and Ukraine impacted the market. Brent and WTI fell over 1% due to increased supply outlook and easing geopolitical tensions.
Oil Prices Drop Amid Prospects of Russia-Ukraine Peace Deal
Discover why oil prices fell by 1% due to potential peace talks between Russia and Ukraine, along with rising crude inventories in the U.S. Impact on energy exports and supply concerns discussed.

Oil Prices Decline Amid Potential Russia-Ukraine Peace Deal

LONDON, Feb 13 (Reuters) - Oil prices fell by 1% on Thursday, influenced by the prospects of a potential peace agreement between Russia and Ukraine, combined with increasing crude inventories in the United States.

By 1138 GMT, Brent futures decreased by 86 cents, or 1.1%, reaching $74.32 a barrel, while U.S. West Texas Intermediate (WTI) crude saw a decline of 91 cents, or 1.3%, settling at $70.46.

Impact of Political Developments on Oil Prices

Both Brent and WTI experienced losses exceeding 2% on Wednesday following remarks from U.S. President Donald Trump. The President indicated that Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy expressed a willingness for peace in separate conversations with him. Subsequently, President Trump instructed U.S. officials to commence discussions towards ending the war in Ukraine.

Shift in Market Dynamics

According to UBS analyst Giovanni Staunovo, the drop in oil prices over the past 24 hours appears to be a result of a shift from supply concerns to perceptions of sufficient supply. He also noted that some market participants anticipate a rise in Russian energy exports.

PVM analyst John Evans stated that the news regarding Ukraine, combined with Wednesday's U.S. oil inventories data, counteracted the effect of higher U.S. inflation figures. These inflation numbers might influence the U.S. Federal Reserve to adopt a cautious stance on interest rate cuts in 2025.

Global Oil Production and Sanctions

Russia, recognized as the world's third-largest oil producer, has faced sanctions on its crude exports following its invasion of Ukraine nearly three years ago. These sanctions have played a role in maintaining higher oil prices.

ANZ analysts noted on Thursday that oil prices decreased due to optimism surrounding the potential peace talks, suggesting that risks to crude oil supplies might diminish. They highlighted the impact of U.S. and EU sanctions on this development.

Recent signs of tightening supply have driven up oil prices in recent weeks. U.S. sanctions on Russian oil companies and vessels are said to have intensified the situation.

Influence of U.S. Crude Inventories

A notable increase in crude oil inventories in the United States, the largest global crude consumer, has also affected the market. According to data from the Energy Information Administration (EIA) released on Wednesday, U.S. crude stocks rose more than anticipated last week.

Reporting by Enes Tunagur in London and Emily Chow in Singapore; Editing by David Goodman.

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