Oil Prices Slide as U.S.-Russia Ceasefire Fuels Oversupply Concerns

Oil prices declined in Asian trading on Wednesday, extending losses from the previous session as a U.S.-Russia agreement on a temporary ceasefire in Ukraine’s energy sector, along with rising crude inventories, raised fears of an oversupplied market.

Key Factors Behind the Decline:

• U.S.-Russia Ceasefire Agreement:
  • Russian President Vladimir Putin and U.S. President Donald Trump agreed to a 30-day pause in attacks on Ukraine’s energy infrastructure.
  • The truce aims to protect critical energy assets, potentially paving the way for broader peace negotiations.
• Potential Sanctions Relief on Russian Energy:
  • If diplomatic talks progress, Washington may ease sanctions on Russian oil exports, leading to an increase in global crude supply.
  • This comes as OPEC+ plans to unwind production cuts in April, further adding to the oversupply outlook.
• U.S. Crude Stockpiles Rise:
  • Higher inventories have reinforced concerns about weakening demand.
• Market Caution Ahead of Federal Reserve Decision:
  • Investors are waiting for clarity on U.S. interest rate policy, which could impact demand outlook.

Oil Market Performance:

• Brent crude (May futures): Fell 0.4% to $70.25 per barrel.
• WTI crude (May futures): Dropped 0.4% to $66.48 per barrel.

While geopolitical risks remain, the market focus has shifted to supply-side concerns and potential shifts in U.S. sanctions policy, which could shape oil prices in the near term.