Oil prices weaker over possible Ukraine-Russia peace agreement

Oil prices weakened on Tuesday, extending the previous session’s declines, as growing optimism over a potential Russia-Ukraine peace agreement lifted expectations that sanctions could ease.

Brent crude slipped 0.6% to $US60.21 a barrel, while West Texas Intermediate edged 0.5% lower to $US56.52.

“Crude oil fell as the market weighed up signs of optimism on a peace deal being reached between Russia and Ukraine,” ANZ analysts noted, adding that the prospect of US sanctions on Russian oil companies eventually being lifted risked further swelling global supply.

Sentiment improved after the US signalled it was willing to offer NATO-style security guarantees for Kyiv, while European negotiators reported progress in talks aimed at ending Russia’s invasion. Despite the shift in tone, agreement on territorial issues remained unresolved.

Price pressure was compounded by soft Chinese economic data released on Monday, heightening concerns about the strength of global demand. China’s factory output slowed to a 15-month low, and retail sales grew at their weakest rate since December 2022, during the COVID-19 pandemic.

A cooling Chinese economy threatens to curb consumption in the world’s largest oil importer, where rising electric vehicle uptake is already constraining petroleum demand.