Brent rises as prospects for Russia-Ukraine peace deal fade

The front-month ICE Brent contract has gained by $0.12/bbl on the day, to trade at $67.54/bbl at 09.00 GMT.

IMAGE: Getty Images

Upward pressure:

Oil prices rose as hopes for a peace deal between Russia and Ukraine faded. The three-and-a-half-year war continued on Thursday, with Russia launching an air strike near Ukraine’s border with the European Union, while Ukraine reported it had hit a Russian oil refinery. At the same time, US and European planners said allied national security advisers have developed military options, according to Reuters.

“Oil prices are on the rise, supported by … ongoing uncertainty about the prospects for peace between Russia and Ukraine,” said Phil Flynn, senior market analyst at Price Futures Group.

“Oil prices moved higher … as the initial enthusiasm over progress towards a ceasefire between Russia and Ukraine continues to fade,” analysts at ING Bank added.

Brent futures also gained support from a larger-than-expected drawdown in US crude inventories, signalling strong demand.

Commercial US crude oil stockpiles fell by 6 million barrels to 421 million barrels for the week ending 15 August, according to the EIA.

Market participants are closely watching the Jackson Hole economic conference in Wyoming for clues on whether the Federal Reserve might cut interest rates next month. Lower rates can stimulate economic growth and drive-up oil demand, which in turn could lift prices.

The annual meeting of central bankers began on Thursday, according to Reuters.

Downward pressure:

Brent prices came under some pressure after the US imposed a 25% tariff on Indian goods starting 27 August, in response to India’s continued imports of Russian oil. The move has raised concerns about possible trade disruptions and weaker demand growth, analysts said.

By Tuhin Roy

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