Renewed Hopes For Russia/Ukraine Peace Boost Oil; Iran Tensions Could Prolong Rally

Meanwhile, Washington sanctions cause China refiners to suspend Russian oil purchases: File Image/Pixabay

The prospect of a ceasefire between Russia and Ukraine after a spat between the latter and Washington inspired crude traders on Friday to stage a meagre price rebound for two key benchmarks.

Brent settled up 70 cents to $70.58 per barrel, while West Texas Intermediate settled up 63 cents at $67.18.

Bloomberg noted that WTI eked out a 0.2 percent gain for the week, “barely skirting an eighth straight weekly decline that would have been its longest such losing streak since 2015.”

However, bearish sentiment even pervaded analysis of what many analysts consider a breakthrough, namely, Russian president Vladimir Putin stating on Thursday that he supported a proposal for a ceasefire based on conditions including an immediate withdrawal of Ukraine troops and an agreement that Ukraine never become a NATO member.

Tony Sycamore, market analyst at IG, said, “Russia’s tepid support of a 30-day ceasefire proposal with Ukraine has reduced confidence around a ceasefire in the short term.”

Still, ANZ analysts mused that “geopolitical tension could still cause supply disruptions,” specifically stemming from China and Russia standing by Iran after Washington demanded nuclear talks with Tehran.

Rebecca Babin, senior energy trader at CIBC Private Wealth Group, said new sanctions imposed by Washington against Iran’s oil minister and on more companies and vessels used by the Islamic republic are “all just words until they’re enforced, so the market is less reactive to the headlines recently.”

As for bearish sentiment stemming from economic challenges, Barclays on Friday lowered its 2025 Brent oil price forecast by $9 per barrel to $74 per barrel; the bank’s analysts explained in a note that "We turn neutral on oil prices relative to the curve and consensus, as we revise down our 2025 demand outlook 510,000 barrels per day due to soft high-frequency indicators and elevated economic uncertainty.”

But they agreed that matters could turn on a dime: "We do not turn bearish relative to the curve, as inventories are low and still declining, and risks to the supply outlook are also skewed to the downside, due to price-sensitive producers pulling back and geopolitical tensions.”

In other oil news on Friday, traders with knowledge of the matter told media that state-owned refiner China Petroleum and Chemical Corporation (Sinopec) as well as Zhenhua Oil have suspended purchases of Russian crude oil loading this month, amid concerns over secondary sanctions.

PetroChina and CNOOC continue to buy Russian oil for March loadings, but at reduced rates.