Oil Prices Rebound as Peace Talks Stall and US Equities Strengthen
Oil prices snapped a seven-week losing streak as US equity markets rebounded and peace talks between Russia and Ukraine hit roadblocks, dampening expectations of Russian crude returning to global markets soon. West Texas Intermediate (WTI) crude gained nearly 1%, settling above $67 per barrel, while Brent crude edged higher but remained just below $71 per barrel. A weaker US dollar and a rally in equity markets further supported oil prices.
Russia-Ukraine Tensions Keep Oil Prices Volatile
Oil markets had been under pressure due to prolonged peace talks between Russia and Ukraine. However, Russian President Vladimir Putin recently urged Ukrainian troops in the Kursk region to surrender, a demand that Ukraine swiftly rejected. This setback in negotiations has cast doubts on a potential ceasefire, keeping geopolitical risks high and delaying the possible return of Russian crude supplies to global markets.
US Crude Avoids Record Losing Streak
US crude managed to post a 0.2% gain for the week, narrowly escaping what would have been its longest losing streak since 2015. The market has faced headwinds due to concerns over slowing global economic growth, fueled by US President Donald Trump’s trade policies, which have heightened uncertainty around future oil demand.
Meanwhile, long-term inflation expectations surged at the fastest pace since 1993, signaling potential economic slowdowns and weaker energy consumption ahead. Despite this, oil prices saw temporary relief when the White House imposed sanctions on Iran’s oil minister, along with additional restrictions on companies and vessels linked to Iran and Russia’s energy sectors. However, these gains were limited as traders remained focused on macroeconomic risks and geopolitical tensions.
Market Reaction and Outlook
According to Rebecca Babin, a senior energy trader at CIBC Private Wealth Group, the oil market is closely watching ceasefire negotiations between Russia and Ukraine. While sanctions and policy announcements make headlines, traders are waiting for concrete enforcement measures before reacting significantly.
“The sanctions developments are all just words until they’re enforced, so the market is less reactive to the headlines recently,” Babin said.
For now, oil prices remain volatile, driven by geopolitical uncertainty, inflation concerns, and the broader economic outlook. Investors will continue monitoring developments in US trade policies, global energy demand, and the evolving situation in Eastern Europe to gauge the future trajectory of crude prices.
