Oil prices dip to one-month low as Ukraine peace talks fuel uncertainty

Oil prices edged higher on Wednesday, following a sharp dip to one-month lows in the previous session, as markets reacted to signs that Ukraine and Russia could be approaching a peace agreement.

Brent crude rose 19 cents, or 0.3 percent, to $62.67 a barrel, while US West Texas Intermediate gained 14 cents, or 0.24 percent, to $58.09 a barrel. Both contracts had fallen 89 cents on Tuesday after Ukrainian President Volodymyr Zelenskiy indicated that only a few points of disagreement remain in a US-backed framework to end the conflict with Russia.

“If finalised, the deal could rapidly dismantle Western sanctions on Russian energy exports,” said IG market analyst Tony Sycamore. He added that this scenario could push WTI prices down to around $55 a barrel.

Markets are now in a holding pattern, waiting for more clarity. Analysts say the risk remains tilted toward lower prices unless negotiations stall.

President Donald Trump said he had instructed US representatives to hold separate talks with both Russian President Vladimir Putin and Ukrainian officials. A Ukrainian source suggested that Zelenskiy might visit the United States in the coming days to finalise a deal.

Despite the potential easing of sanctions, crude prices are also receiving support from expectations of a possible US Federal Reserve interest rate cut in December. Recent economic data showed softer inflation and lower retail spending, which could encourage the Fed to reduce rates. Lower borrowing costs would support economic growth and boost oil demand.

Meanwhile, Western sanctions on Russia remain tight, with Britain, Europe, and the United States maintaining pressure on Russian energy exports. Key buyers, including India, are expected to import the least Russian oil in three years this December.

The combination of geopolitical uncertainty and potential policy shifts continues to make oil markets volatile, leaving traders cautiously watching developments in both Ukraine and global economic indicators.