Oil News: Russian Ceasefire Hints at Higher Crude Supply—How Will Markets React?

Crude Oil Prices Drop as Russia Signals Potential Supply Increase

Crude oil futures edged lower on Wednesday, reversing earlier gains after failing to break key resistance levels. A test of $68.50 fell short of the short-term pivot at $68.97 and the crucial 200-day moving average at $70.09, which remains a major technical barrier. The market is now hovering near the $66.05 pivot, with a potential retest of $65.01 if selling pressure intensifies. However, if prices hold above this level, it could form a higher secondary bottom, signaling renewed buying interest.

At 10:56 GMT, Light crude oil futures are trading $66.56, down $0.19 or -0.28%.

Russia’s Energy Strike Halt Sparks Supply Concerns

Oil prices weakened following Russian President Vladimir Putin’s agreement to pause strikes on Ukrainian energy facilities, responding to U.S. President Donald Trump’s proposal. While Putin did not fully commit to a broader ceasefire, traders anticipate that this temporary halt could eventually facilitate increased Russian crude exports.

Despite ongoing sanctions, Russia remains a key global supplier, and any reduction in geopolitical risk tends to weigh on prices. Analysts warn that while a ceasefire may take time to impact export flows significantly, it could improve market sentiment regarding future supply levels. Panmure Liberum’s Ashley Kelty noted that oil traders are pricing in this potential shift, alongside broader economic concerns stemming from U.S. tariff policies.

Tariffs and Economic Risks Pressure Oil Demand Outlook

Growing fears over a global economic slowdown, exacerbated by U.S. tariffs on Canada, Mexico, and China, have further pressured crude prices. Tariff escalation raises recession risks, which could dampen demand for crude oil in the coming months. Goldman Sachs analysts highlighted that high global spare capacity and the uncertain economic outlook skew oil price risks to the downside.

Although Goldman Sachs revised its Brent forecast range lower to $65-$80 per barrel, it still expects prices to recover modestly in the near term. However, the bank emphasized that market expectations for volatility and potential supply disruptions remain too low, given ongoing geopolitical risks.

Middle East Tensions Provide Some Price Support

Despite bearish sentiment surrounding Russian supply and economic concerns, tensions in the Middle East continue to pose upside risks. Trump’s warning of further U.S. strikes on Yemen’s Houthis, along with renewed Israeli airstrikes in Gaza, has raised concerns about potential disruptions to energy flows from the region. While no immediate supply threats have materialized, traders remain alert to escalating geopolitical risks that could tighten the market.

Inventory Data Offers Mixed Signals

U.S. crude stockpiles rose by 4.59 million barrels last week, according to API data, suggesting weaker short-term demand. However, gasoline and distillate inventories fell by 1.71 million barrels and 2.15 million barrels, respectively, reflecting resilient refined product consumption. Official government inventory data, due later on Wednesday, could provide further clarity on supply-demand balances.

Market Outlook: Bearish Bias with Geopolitical Risks in Focus

Oil markets are leaning bearish in the short term, with traders reacting to the potential easing of Russian supply constraints and broader economic headwinds. The key technical levels to watch are $66.05 and $65.01, with a break below likely reinforcing downward momentum. However, geopolitical tensions in the Middle East remain a wildcard, preventing a deeper selloff for now.

More Information in our Economic Calendar.