Last Friday, international oil prices slightly declined as the leaders of Russia and Ukraine expressed willingness to advance peace talks. The market anticipated that sanctions might be lifted, easing global energy supply tensions. However, the U.S.'s decision to delay implementing reciprocal tariffs provided some support to the market, limiting the drop in oil prices.
Brent crude futures fell 0.37% to close at $74.74 per barrel, while U.S. crude futures dropped 0.77% to $70.74. Overall, Brent crude inched up 0.11% last week, whereas U.S. crude fell slightly by 0.37%.
The primary driving factor for market sentiment is the progress in the Russia-Ukraine situation. Russian President Putin and Ukrainian President Zelensky held separate phone calls with U.S. President Trump, expressing their desire to advance the peace process. Subsequently, Trump ordered U.S. officials to initiate relevant talks to resolve the conflict as soon as possible. Analysts believe that if Russia and Ukraine reach a peace agreement, the West might relax sanctions on Russia, improving global energy supply and thus restraining oil price hikes.
The International Energy Agency (IEA) noted in its latest oil market report that despite the latest U.S. sanctions on Russia, Russian oil exports might remain high if Russia finds ways to circumvent these sanctions. Additionally, U.S. energy services company Baker Hughes reported that in the week ending February 14, the number of active oil and gas rigs in the U.S. increased by two, reaching a total of 588. This is the third consecutive weekly increase in rig numbers since December 2023, seen as an early sign of rising future production.
On the other hand, U.S. trade policy also affected market sentiment. Last Thursday, Trump instructed commerce and economic officials to explore imposing reciprocal tariffs on countries exporting to the U.S. and to submit relevant recommendations by April 1. However, market analysts pointed out that the U.S. has not immediately implemented this measure, implying that trade tensions will not escalate further in the short term, which supports the warming of market risk sentiment. IG market strategist Yeap Jun Rong stated, "The U.S. decision to delay reciprocal tariffs allows for some progress in trade talks, providing partial support for oil prices."
Additionally, U.S. Treasury Secretary Besent mentioned that the U.S. might impose stricter economic sanctions on Iran, which also limited the drop in oil prices. Overall, although the market remains optimistic about the Russia-Ukraine peace prospects, which weakens the supporting factors for crude oil prices, the U.S. delay on reciprocal tariffs and its policy toward Iran still provide some bottom support for oil prices.
