Oil Declines On Possible Russia/Ukraine Peace, As Trump's Tariffs Inspire Optimism

Increasingly, analysts realize that the tariff threats are a negotiating tactic: File Image/Pixabay

The prospect of peace between Russia and Ukraine caused more losses for oil on Thursday, albeit much milder than the previous session's 2 percent-plus drop in prices - thanks to optimism generated by a pause in further U.S. tariffs.

As of 1715 GMT, Brent was down 17 cents, or 0.2 percent, at $75.01 per barrel; West Texas Intermediate crude was down 1 cent, or 0.1 percent, to $71.38.

While there were no further developments following U.S. president Donald Trump's talks in the previous session with Russian president Vladimir Putin and Ukrainian president Volodymyr Zelenskiy (both of whom reportedly indicated a desire for peace), Thursday's trading was heavily influenced by Trump stating on social media that he was planning reciprocal tariffs, which could affect every country charging duties on U.S. imports.

Phil Flynn, senior market analyst at Price Futures Group Inc., explained that a pause on actually implementing the tariffs (as evidenced by the pauses granted to Canada and Mexico) was cause for optimism: "We saw a big recovery in prices on tariffs not going into effect until April; that will allow time for negotiation."

Also on Thursday, the International Energy Agency in its latest monthly report raised its forecast minimally for global oil demand growth, citing improved compliance with output quotas among members of the Organization of the Petroleum Exporting Countries (OPEC) and its allies - which in turn is reducing supply surplus in the market.

This dovetailed with OPEC stating in its latest monthly report that global oil demand will rise by 1.45 million barrels per day (bpd) this year and by 1.43 million bpd in 2026.

In other oil related news on Thursday, media reported that Asia is on track to receive about 3.23 million bpd of Russian crude in February, according to data compiled by LSEG Oil Research; this represented a decline of about 7.4 percent from 3.49 million bpd in January, with distribution data showing that India was buying more and China was buying less.

India's imports are expected to reach a three-month high of at least 1.71 million bpd or more, making that country the top buyer of Russian crude in the wake of sanctions against Russia cutting off customers in Europe.