Trump Causes Oil To Revert To Losses As End Of Russia/Ukraine War Is Discussed

But brewing Israel/Hamas hostilities could mean a massive price upswing soon: File Image/Pixabay

Oil returned to its Donald Trump-induced losses on Wednesday, plunging more than 2 percent after the U.S. president discussed ending the Russia/Ukraine between those countries' two leaders.

Trump discussed the war in with Russian president Vladimir Putin, then posted on social media that he and Putin had "agreed to have our respective teams start negotiations immediately, and we will begin by calling president Zelenskiy, of Ukraine, to inform him of the conversation, something which I will be doing right now."

Trump then spoke with Volodymyr Zelenskiy for about an hour, and although no tangible outcome was disclosed, this caused Brent to drop $1.71, or 2.2 percent, at $75.29 per barrel by 1:38 p.m. EST.

West Texas Intermediate dropped $1.78, or 2.4 percent, to $71.54.

Phil Flynn, senior market analyst at Price Futures Group Inc., said, "Trump doing peace talks, I think that has taken some of the risk premium out of oil prices right now; the combination of higher inflation and the possibility of peace [in Ukraine] is causing a bit of a sell off in the market at the moment."

Flynn was referring to U.S. consumer price data showing surprisingly strong inflation in January, which in turn kindled fears that that a heating economy and looming tariffs could quash the possibility for further rate cuts from September to December from the U.S. Federal Reserve.

Still, key figures in the energy world left their forecasts for 2025 unchanged: the Organization of the Petroleum Exporting Countries (OPEC) said 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.

Similarly, although the Energy Information Administration increased its estimate for U.S. crude production to average 13.59 million bpd in 2025, it too left its demand forecast unchanged.

This dovetailed with earlier forecasts from Singapore-based investment management practice ELD Asset Management that energy prices would rise notably in the first 6 months of this year, with crude being the likely standout, and that increased industrial activity and mobility are fuelling higher energy demand,

However, a monkey wrench in these outlooks – and a possible sharp reversal of the oil price losses inspired by Trump - could come from geopolitical sources, specifically Gaza, which media reported  was on the brink of war once more, due to Hamas saying it won't release hostages until it gets more humanitarian supplies, and Israel saying it will start fighting again if the militant group doesn't let the hostages go free.

The only certainty for the foreseeable future regarding crude trading seems to be uncertainty: in its monthly report, OPEC stated that Trump's trade policies risk stoking volatility in global markets and have the potential to create supply-demand imbalances that are not reflective of fundamentals.