Oil prices steadied on Friday amid uncertainty surrounding a potential peace deal between Russia and Ukraine as Brent crude gained 6 cents or 0.09 per cent to close at $67.73 per barrel, and the United States’ West Texas Intermediate (WTI) crude rose by 14 cents or 0.22 to $63.66 per barrel.
US President Donald Trump said on Friday he will see if Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy will work together to end Russia’s war in Ukraine.
President Trump pledged to protect Ukraine under any war-ending deal, and President Zelenskiy dismissed the idea of withdrawing from internationally recognised Ukrainian land as President Putin demands that Ukraine give up all of the eastern Donbas region, renounce NATO ambitions and keep Western troops out of the country.
Both Russia and Ukraine accused each other of derailing negotiations as Russia launched a major air assault near the EU border, and Ukraine responded with a strike on a Russian refinery, which affects flows to Hungary and Slovakia.
The Druzhba pipeline carries Russian crude to Central Europe. The pipeline is a key artery of oil supply from Russia to Europe, with two branches: a northern one via Belarus that supplies Belarus, Poland, Germany, Latvia, and Lithuania, and a southern one passing through Ukraine and sending oil to the Czech Republic, Slovakia, Hungary, and Croatia.
Russian crude oil flows via pipeline are not subject to sanctions or embargoes, as landlocked central European countries don’t have much choice.
With no ceasefire in sight, the geopolitical risk premium began to build again.
Market analysts noted there is still uncertainty around the potential ceasefire as the negotiations are not going as quick as the market would have hoped, adding that the less likely a ceasefire looks, the more likely the risk of tougher US sanctions on Russia.
US Federal Reserve Chair Jerome Powell on Friday pointed to a possible interest rate cut at the US central bank’s meeting next month. Lower interest rates can stimulate economic growth and increase oil demand, potentially boosting prices.
Prices held on to support from a drawdown in US crude stockpiles in the past week, which indicates strong demand. Stocks fell by 6 million barrels in the week ended August 15, the US Energy Information Administration said on Wednesday.