Oil prices fell on Friday as expectations for a diplomatic breakthrough in the Russia-Ukraine war and fading prospects of a US Federal Reserve (Fed) rate cut in December pressured markets, even as new US sanctions on Russian oil majors Rosneft and Lukoil came into force.
International benchmark Brent crude was trading at $62.12 per barrel at 10.10 a.m. local time (0700 GMT), down 0.8% from the previous close of $62.60.
US benchmark West Texas Intermediate (WTI) also decreased by about 1% to $58.09, compared to $58.66 in the prior session.
- Peace push fuels expectations of higher future supply
Ukrainian President Volodymyr Zelenskyy received a new draft plan from the US aimed at reviving stalled peace talks with Moscow, his office said in a statement on Telegram.
“The President of Ukraine officially received a draft plan from the American side, which, according to the American side, can intensify diplomacy,” the statement said.
Zelenskyy outlined the fundamental principles that are important for Kyiv and agreed to work on the points of the plan following the result of a meeting held earlier Thursday.
It went on to say that Kyiv has supported US President Donald Trump's proposals to end the over three-and-a-half-year Russia-Ukraine war since the beginning of the year, and is ready to work with Washington and partners in Europe and around the world.
Zelenskyy is expected to discuss the “available diplomatic opportunities” and the main points that are “needed for peace” with US President Donald Trump “in the coming days,” the statement added.
About an hour before the release of the statement, Ukrainian media outlets, including public broadcaster Suspilne, reported that Zelenskyy met a US army delegation in Kyiv, led by Army Secretary Dan Driscoll. Zelenskyy later confirmed the meeting in a statement on US social media company X.
Driscoll arrived on Wednesday, where he held talks with Defense Minister Denys Shmyhal. He also met with Prime Minister Yulia Svyrydenko on Thursday.
Expectations that the war could end, sanctions on Russian oil could be lifted, and a resulting increase in supply could hit the market are putting downward pressure on prices.
- Russia sanctions, Fed outlook shape market mood
In addition, supply risks originating in Russia are limiting the downward trend in prices. On Oct. 23, US President Donald Trump added Lukoil, Rosneft and their subsidiaries to the sanctions list, saying they showed a “serious lack of commitment” to the peace process aimed at ending the war in Ukraine.
US sanctions targeting major Russian producers Rosneft and Lukoil are set to take effect on Friday. Analysts say the move could weaken global oil flows and push buyers to the open market as the risk of supply disruptions from Russia rises.
On the demand side, investors are watching for signals on the Fed’s interest rate policy.
Analysts said the recovery in nonfarm payrolls eased concerns about a cooling job market. The stronger-than-expected figures were the final employment report before the Federal Reserve’s Federal Open Market Committee meets on Dec. 9–10.
With these developments, the probability of a Fed rate cut in December has fallen to 35% in money market pricing. Analysts say the high-rate environment, which supports the dollar, could weigh on prices by weakening oil demand.
By Handan Kazanci
Anadolu Agency
energy@aa.com.tr