Oil prices fell on Thursday as investors focused on Russia-Ukraine peace talks and trimming in the projected 2026 oil surplus, with Brent crude trading at $61.28 a barrel after losing 93 cents or 1.49 per cent and the US West Texas Intermediate (WTI) crude at $57.60 a barrel, down by 86 cents or 1.47 per cent.
The prospect of a possible peace agreement between Russia and Ukraine also appeared to be driving the market lower. Such a deal would likely increase the supply of Russian oil that is currently off the market for most of the world.
Despite attacks, market analysts noted that there seems to be some movement on a possible path to peace between Russia and Ukraine.
The leaders of Britain, France and Germany held a call on Wednesday with US President Donald Trump to discuss the US’ latest peace efforts to end the war in Ukraine, in what they said was a “critical moment” in the process.
Russian Foreign Minister Sergei Lavrov said on Thursday that a recent visit to Moscow by US envoy Steve Witkoff had resolved misunderstandings between the two countries.
Ukraine’s security services (SBU) executed a long-range drone strike on the Vladimir Filanovsky offshore oil field in the Caspian Sea, a key Lukoil facility, forcing a suspension of oil and gas production.
The attack is significant as it marks the first time Kyiv has targeted hydrocarbon extraction assets in the distant Caspian region, demonstrating a growing capability to hit critical upstream assets far from the frontline.
On Wednesday, the US said it seized an oil tanker off the coast of Venezuela, as escalating tensions between the two countries raised concerns about supply disruptions.
The Organisation of the Petroleum Exporting Countries (OPEC) in its latest monthly report maintained a firm demand outlook for 2025-2026, pointing to resilient consumption in China, India, and the Middle East while reiterating that non-OPEC supply growth is set to moderate after 2025.
The group also noted that OPEC+ supply management continues to anchor market stability, a markedly more optimistic stance than the International Energy Agency (IEA’s) earlier glut-heavy narrative.
In its latest update, the agency trimmed the projected 2026 surplus for the first time since May, cutting its glut forecast from 4.09 million barrels per day to 3.84 million barrels per day as sanctions on Russia and Venezuela curb supply and as global demand proves stronger than previously assumed. Improved macro conditions and easing tariff concerns also prompted the IEA to revise 2026 demand growth upward by 90,000 barrels per day.