Oil prices surged nearly 3% after peace talks between Ukraine and Russia collapsed, renewing market concerns over long-term sanctions and supply constraints on Russian oil.
Traders are balancing the potential for additional supply from US-Iran nuclear talks against heightened risks from joint naval drills and tensions around the Strait of Hormuz, contributing to price swings.
A localized European energy dispute escalated after Hungary halted diesel shipments to Ukraine, calling the Ukrainian blockage of Russian oil transit “political blackmail,” and is now seeking alternative supply routes through Croatia.
Oil prices surged nearly 3% on Wednesday after peace talks between Ukraine and Russia in Geneva ended abruptly after only two hours. The failure to reach a breakthrough heightened market fears that sanctions and supply restrictions on Russian oil will persist longer than previously anticipated. Brent crude for April delivery was up 2.74% to trade at $69.15 per barrel at 8.20 am ET in Wednesday’s morning session while WTI crude for March delivery gained 2.79% to change hands at $64.05 per barrel.
Ukrainian President Volodymyr Zelenskiy called the talks “difficult” and said Russia was dragging its feet rather than moving seriously toward ending the war, now in its fourth year. Before the breakdown, traders had started to factor in the possibility of a “peace dividend”, in which Russian crude could flow more freely back into global markets. When the negotiations stalled, that expectation faded, and oil prices moved higher as geopolitical risk returned to the forefront.
Traders are also focused on Iran. U.S.-mediated nuclear talks could eventually lead to some sanctions relief and allow more Iranian crude onto the market. At the same time, joint naval drills with Russia and renewed tension around the Strait of Hormuz, through which about 20% of global oil supply passes, are keeping supply risks in view. That balance between possible additional barrels and potential disruption is adding to price swings.
Meanwhile, tensions remain high following reports that Hungary has halted diesel shipments to Ukraine until crude flows through the Druzhba pipeline are fully restored. Hungarian Foreign Minister Péter Szijjártó announced that the cessation is a direct response to the halt of Russian oil transit through Ukraine, which has been blocked since January 27, 2026.
Hungary has called the halt in crude shipments “political blackmail” by Ukraine and insists there is no technical reason the transit cannot restart. To secure supplies, Hungary’s MOL Group has asked to tap about 250,000 tons of strategic crude reserves and is looking at moving Russian oil through Croatia via the Adriatic pipeline. Slovakia has also warned that continued disruption could affect fuel imports and force limits on exports.
Adding to the strain, Croatian Prime Minister Andrej Plenkovi? has voiced reservations about increasing the transit of Russian crude to Hungary through Croatia’s territory, suggesting that any expanded use of the Adriatic pipeline could face political scrutiny in Zagreb.
By Alex Kimani for Oilprice.com
More Top Reads From Oilprice.com
Back to homepage
