Market Analysis

Brent and WTI Prices Hold Firm Amid Ceasefire Negotiations Between Russia and Ukraine

Amos Simanungkalit · 24 Mar14.6K Views

Image Credit: Reuters

Oil prices remained stable on Monday as investors weighed the potential impact of ceasefire talks between Russia and Ukraine, which could result in more Russian oil entering global markets.

Brent crude futures were down 8 cents, or 0.1%, at $72.08 a barrel by 0046 GMT, while U.S. West Texas Intermediate crude slipped 5 cents, or 0.1%, to $68.23. Both benchmarks had settled higher on Friday and posted a second consecutive weekly gain, fueled by fresh U.S. sanctions on Iran and OPEC+ production plans, which heightened expectations of tighter supply.

A U.S. delegation is set to meet Russian officials on Monday to discuss progress on a ceasefire in the Black Sea region and broader peace efforts, following talks with Ukrainian diplomats on Sunday.

"Expectations of peace progress between Russia and Ukraine, along with a potential easing of U.S. sanctions on Russian oil, put downward pressure on prices," said Toshitaka Tazawa, an analyst at Fujitomi Securities. "However, investors are holding off on major positions as they assess future OPEC+ production plans beyond April."

OPEC+ – which includes the Organization of the Petroleum Exporting Countries and allies like Russia – announced last Thursday that seven member nations would implement further output cuts to compensate for production exceeding agreed levels. These cuts are expected to more than offset the group’s planned monthly production increases next month.

However, Kazakhstan’s oil output reached a record high this month due to oilfield expansions, surpassing OPEC+ quotas, according to industry sources and Reuters calculations.

OPEC+ has been cutting output by 5.85 million barrels per day (approximately 5.7% of global supply) since 2022 in an effort to stabilize the market. On March 3, the group confirmed that eight members would raise production by 138,000 bpd starting in April, citing improved market conditions.

Market participants are also keeping an eye on the impact of new U.S. sanctions on Iran. Iranian oil shipments to China are expected to decline in the short term due to sanctions on a refiner and tankers, raising shipping costs. However, traders believe buyers will find ways to maintain some oil flow.

In the U.S., energy firms added oil and natural gas rigs for the first time in three weeks, according to a report by energy services firm Baker Hughes.