Oil prices extended a multi-session slide in early Asian trading on Friday, weighed down by news of Zelenskyy agreeing to work with Washington on a peace plan, a development that could ultimately add fresh barrels into an already fragile market.
At the time of writing, West Texas Intermediate for December delivery had slipped by 1.03% to $58.39 per barrel, while Brent crude for January delivery had fallen 0.99% to $62.75.
A continued pullback would mark the third consecutive daily decline for WTI, putting the U.S. benchmark on track for a weekly loss of over 2%, a reflection of broader concerns over global supply growth and a weakening demand outlook
News of Zelenskyy considering the peace proposal comes on the same day that new U.S. sanctions on Rosneft and Lukoil officially take effect, targeting key subsidiaries in an effort to restrict Kremlin revenue from fossil-fuel sales. While those sanctions should tighten supply, that has largely been baked into markets at this point.
Russian Urals crude, already discounted due to sanctions, has been trading as much as $23 per barrel below other global grades, evidence that sanctions are having an effect.
In the U.S., crude stockpiles unexpectedly fell by 3.4 million barrels last week on the back of strong refinery activity. But the bullish inventory surprise failed to lift prices as traders remained focused on the geopolitical picture.
Energy markets also faced macro-driven pressure, with Asian stocks declining sharply after Thursday’s U.S. employment data clouded expectations for imminent Federal Reserve rate cuts, boosting the dollar and intensifying risk-off sentiment.
A stronger greenback, the currency hit a broad rally against major and commodity-linked currencies, further weighed on dollar-priced crude.
OPEC+ remains a fundamental force in the overall bearishness of oil markets, with the group committed to boosting production in December before halting output increases in early 2026. If oil prices continue to tumble, then markets will look to the group to rein in its output.
In the short term, markets will remain fixated on Kyiv and Washington for the next major signal, one that could determine the trajectory of crude heading into December.
By Charles Kennedy for Oilprice.com
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