Oil markets are adjusting to renewed geopolitical developments as U.S. President Donald Trump intensifies efforts to conclude a revised Russia–Ukraine peace agreement, a move analysts say could unlock millions of barrels of Russian crude currently restricted by sanctions.
The United States and Ukraine resumed work on a modified deal ahead of Thursday’s deadline after earlier proposals drew criticism for favouring Moscow.
The discussions come at a time when global oil benchmarks continue to trade near multi-week lows.
Brent crude stood at $62.56 per barrel on Monday, while West Texas Intermediate (WTI) eased slightly to $58.04 per barrel.
Both contracts recently recorded their weakest settlements since October 21, reflecting a market grappling with both political uncertainty and shifting supply expectations.
According to analysts, last week’s 3% decline in crude prices was driven largely by the White House’s accelerating push for the agreement.
Tony Sycamore, analyst at IG, noted that financial markets view the deal as a potential fast-track mechanism for bringing additional Russian supply back into the global system.
“The sell-off was triggered mainly by President Trump’s forceful push for a Russia–Ukraine peace deal, which markets see as a fast track to unlocking substantial Russian supply,” he said.
Sanctions remain a significant constraint on Russian exports. Measures imposed on state-owned Rosneft and private producer Lukoil took effect on Friday, leaving an estimated 48 million barrels of Russian crude stranded at sea.
The curbs have limited Russia’s ability to redirect shipments, creating logistical pressure while simultaneously tightening short-term supply.
A successful peace agreement could roll back many of these sanctions, potentially releasing the stranded volumes and allowing Russia to ramp up shipments. Russia was the second-largest crude producer globally in 2024, according to data from the U.S. Energy Information Administration.
European leaders, however, are pushing for amendments that address earlier concerns over the agreement’s structure and long-term enforcement. Their position introduces an additional layer of uncertainty ahead of President Trump’s Thursday deadline.
Beyond geopolitical risks, financial markets are also tracking signals from the U.S. Federal Reserve regarding potential interest-rate adjustments.
Speculation of a December rate cut increased after New York Federal Reserve President John Williams suggested the possibility of easing in the near term.
While rate cuts often improve global risk appetite and support commodities, the immediate direction of the oil market remains tied to progress in the peace negotiations.
Crude oil has already declined nearly 17% this year amid persistent negative sentiment and demand-side caution. Analysts note that while lower price levels could attract value buying, the dominant driver in the coming days will be the diplomatic outcome of the Russia–Ukraine discussions.