Oil prices fell in Asian trade on Thursday as U.S. President Donald Trump talked up a potential peace treaty between Russia and Ukraine, which could potentially free up Russian oil supply curbed by U.S. sanctions.
Markets were also digesting a hotter-than-expected U.S. consumer price index inflation reading, which furthered the notion that U.S. interest rates will remain high for longer.
Trump’s tariff agenda also kept markets on edge, after he imposed tariffs on metal imports this week and also threatened reciprocal tariffs against major U.S. trading partners.
Brent oil futures expiring in April fell 0.9% to $74.51 a barrel, while West Texas Intermediate crude futures fell 0.9% to $70.61 a barrel by 21:35 ET (01:35 GMT).
Weak U.S. inventory data- which showed a bigger-than-expected build in oil stockpiles- also pressured prices.
Trump says Russia, Ukraine seeking peace
Trump said on Wednesday that both Russian President Vladimir Putin and Ukraine President Volodymyr Zelenskiy had expressed a desire to end their long-running conflict, during separate phone calls with him. Trump said he had now instructed top U.S. officials to begin peace talks.
This came after Defense Secretary Pete Hegseth said Ukraine will no longer seek membership in the NATO alliance, or to take back all of its territory seized by Russia. Ukraine’s inclusion in NATO had been a major point of contention for Moscow, and was a big motivator of its full-scale invasion of Ukraine in 2022.
A peace treaty could bring an end to the long-running conflict- a notion that sparked a rally in broader markets.
But for oil, a peace treaty also points to the lifting of strict U.S. sanctions against Russian crude, which could free up substantially more supplies.
Oil prices fell on this notion, with traders also pricing in a smaller risk premium on the prospect of a peace treaty.
CPI, tariff jitters weigh on crude
Oil markets were also grappling with hotter-than-expected U.S. consumer price index inflation data, which points to interest rates remaining high for longer.
High rates could weigh on the U.S. economy and dent demand in the world’s biggest fuel consumer.
Sentiment towards commodity markets was also rattled by Trump imposing tariffs on steel and aluminum imports this week, and threatening higher duties across the board.
Still, weaker oil prices are in line with Trump’s agenda of bringing down inflation, given that they translate into lower prices at the pump.
