As prospects for a peace agreement between Ukraine and Russia to end the three-year conflict rise, market sentiment has turned bearish. News that President Zelenskyy is considering the peace proposal comes on the same day that new U.S. sanctions on Rosneft and Lukoil take effect, targeting key subsidiaries to curb Kremlin revenue from fossil fuel sales.
This comes as the market grows skeptical that the latest restrictions on Russian oil companies Rosneft and Lukoil will be effective. A peace deal could enable Russia to increase fuel exports. In 2024, Russia was the world’s second-largest crude oil producer, after the United States.
A stronger U.S. dollar (DXY) also weighed on oil prices. The greenback reached a six-month high against a basket of other currencies, making dollar-denominated oil more expensive for many global buyers.
Doubts about a potential U.S. Federal Reserve interest rate cut continue to linger. Dallas Fed President Lorie Logan suggested keeping the policy rate on hold “for a time” to assess how current borrowing costs are affecting the economy. Meanwhile, New York Fed President John Williams said the central bank could still cut interest rates “in the near term” without jeopardizing its inflation target. Lower interest rates could support economic growth and increase oil demand.
U.S. factory activity slowed to a four-month low in November, as higher prices from import tariffs restrained demand. This led to a buildup of unsold goods, which could weigh on overall economic growth.
The American Petroleum Institute (API) estimated that U.S. crude oil inventories rose by 4.4 million barrels in the week ending November 14, following a 1.3-million-barrel increase the previous week.
OPEC+ is likely to continue its production ramp-up next year regardless of price movements, according to traders who believe the expected crude oversupply will not be sufficient to deter the group from increasing output. If oil prices keep falling, however, markets may expect OPEC+ to scale back production.
China’s crude oil imports remained high last month, with purchases from certain countries reaching all-time highs, according to customs data cited by Reuters.
Bitumen cargo prices in northern and central Europe declined as construction activity and bitumen demand tapered ahead of the winter low season. In Rotterdam and the Baltic, export bitumen cargoes dropped $20, settling at $364/t and $356/t, respectively.
Mediterranean bitumen cargo prices also fell, in line with significant regional high-sulphur fuel oil (HSFO) declines, to $352/t. In Italy and Spain, cargoes were assessed at $356/t and $359/t, respectively.
Singapore export prices continued to ease due to weak import demand in Southeast Asia. In Singapore, Thailand, and South Korea, average export bitumen prices fell by $7, $10, and $6, reaching $392/t, $395/t, and $356/t, respectively.
In contrast, Iranian cargo values bucked the global trend, rising to $298/t on the back of strong demand from key consuming markets and tight supply.