Global oil markets extended their losses for a second consecutive session on Wednesday, pressured by persistent concerns over weak demand and a potential supply glut. The focus of investors remained firmly fixed on the outcome of high-stakes peace negotiations concerning the Russia-Ukraine war, which could significantly alter the flow of Russian crude to the world market.
Market Prices and Geopolitical Tensions
Brent crude futures, the international benchmark, declined by 13 cents, or 0.21%, to reach $62.32 per barrel by 0221 GMT. This followed a 1.1% drop in the previous trading session. Similarly, U.S. West Texas Intermediate (WTI) crude saw a decrease of 12 cents, or 0.20%, trading at $58.52 a barrel after a 1.2% fall on Tuesday.
The price movement reflects a market in a holding pattern, awaiting clarity from geopolitical developments. A key factor is the potential for a peace deal in Ukraine, which could lead to the removal of Western sanctions on major Russian oil corporations like Rosneft and Lukoil. Such a move would unlock substantial volumes of crude currently restricted from certain markets.
Stalled Talks and Supply Concerns
Hopes for a swift resolution were dampened after the Russian government stated that a five-hour meeting between President Vladimir Putin and top envoys of U.S. President Donald Trump failed to yield a compromise on a possible peace plan for Ukraine. Further complicating the situation, President Putin accused European powers of obstructing U.S. peace efforts by proposing terms they knew Moscow would find "absolutely unacceptable."
These developments have heightened worries that Russian oil supply may continue to face restrictions for key buyers, including major importers like China and India, if the talks remain inconclusive. Meanwhile, the ongoing conflict continues to pose direct risks to infrastructure. Recent drone attacks by Ukraine on Russian oil export facilities on the Black Sea coast underscore the persistent geopolitical risk premium in the market.
In response to these attacks, the Caspian Pipeline Consortium, which handles exports from Russia and Kazakhstan, is reportedly aiming to complete repairs on a damaged mooring in the Black Sea ahead of schedule to restore full export capacity.
Mounting Pressure from Inventories and Demand
Beyond geopolitics, fundamental market factors are exerting strong downward pressure on prices. Analysts point to growing concerns about an oversupply of crude coupled with softening global demand. Tony Sycamore, a market analyst at IG, noted that these concerns "continue to weigh on the crude oil price," which needs to hold above support levels in the mid-$50s to avoid a steeper decline.
Adding concrete data to these fears, the American Petroleum Institute (API) reported a significant build in U.S. stockpiles. According to market sources citing the API figures, U.S. crude inventories rose by 2.48 million barrels in the week ended November 28. The report also showed substantial increases in fuel stocks, with gasoline inventories up by 3.14 million barrels and distillate stocks growing by 2.88 million barrels.
The market awaited official confirmation from the U.S. Energy Information Administration's government stockpile data, due for release later on Wednesday. The combination of rising inventories and uncertain demand prospects continues to create a challenging environment for oil prices, keeping traders cautious as they monitor both warehouse data and diplomatic headlines.
