Oil prices declined on Thursday as hopes for a potential peace agreement between Ukraine and Russia raised expectations that sanctions affecting supply flows could be lifted. Additionally, U.S. President Donald Trump’s plan to impose reciprocal tariffs heightened concerns about inflation.
By 0141 GMT, Brent crude futures had dropped 55 cents (0.73%) to $74.63 per barrel, while U.S. West Texas Intermediate (WTI) crude fell 52 cents (0.73%) to $70.85.
Read more: Oil Prices Fall Due to Rising US Fuel Stocks and Stronger Dollar
The market had already seen over a 2% drop on Wednesday after Trump revealed that both Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy had shown interest in peace during separate phone calls with him. Following these discussions, Trump directed top U.S. officials to initiate talks on ending the conflict in Ukraine.
Russia, the world’s third-largest oil producer, has faced sanctions on its crude exports since its invasion of Ukraine nearly three years ago. These restrictions have contributed to elevated oil prices. Analysts at ANZ noted that oil prices eased as news of potential peace talks sparked optimism that risks to crude supplies would diminish.
The analysts also highlighted that U.S. and EU sanctions had led to a reduction in Russian oil output, while recent signs of supply tightening had been pushing prices upward. U.S. restrictions on Russian oil firms and shipping vessels were cited as factors exacerbating the situation.
Meanwhile, Trump’s renewed tariff threats against U.S. trade partners further pressured oil prices, as fears of an economic slowdown could impact global oil demand. Trump announced plans to impose reciprocal tariffs on any country that levies duties on U.S. imports, raising concerns over a potential trade war and rising inflation.
Adding to market pressures, U.S. crude inventories saw an unexpected increase. The Energy Information Administration (EIA) reported on Wednesday that crude stocks rose by 4.1 million barrels to 427.9 million barrels for the week ending February 7, surpassing analysts’ expectations of a 3-million-barrel increase.
