Russia's Sanctioned Oil Exports Boost Global Prices Amid Conflict

Russia is the third-largest producer of oil in the world, and sanctions placed on its exports following its invasion of Ukraine over three years ago have contributed to rising prices.

Oil prices experienced a slight decline as rising petroleum inventories in the United States and the potential for a peace deal between Russia and Ukraine continued to apply downward pressure.

Following President Donald Trump's directive for U.S. officials to initiate discussions to conclude the war in Ukraine, Brent and WTI prices dropped over 2% on Wednesday. Trump stated that both President Volodymyr Zelenskiy of Ukraine and President Vladimir Putin contacted him individually, expressing a wish for peace.

PVM analyst John Evans stated that the news and the U.S. oil inventory figures released on Wednesday contradicted rising U.S. inflation rates, which might make the U.S. Federal Reserve reluctant to lower interest rates in 2025.

In relation to the U.S. and EU sanctions, ANZ analysts said on Thursday that "optimism that risks to crude oil supplies would ease" was the reason oil prices declined following news of the potential peace talks.

The market was also affected by a rise in crude oil inventories in the United States, the biggest petroleum consumer globally. Data from the Energy Information Administration (EIA) indicates that U.S. crude inventories rose more than expected last week.