Oil Slides As Trump's Peace Gambit Signals Potential Russian Supply Thaw

Crude took a breather Thursday, with WTI December contracts dropping 0.44% to $59.18/barrel, as the market weighed conflicting signals: U.S. sanctions on Russian giants Rosneft and Lukoil kicking in tomorrow versus reports that Trump is quietly greenlit talks with Moscow on a 28-point Ukraine peace proposal.

The calculus is straightforward—if peace talks gain traction, sanctions could ease and Russian oil floods back into global markets, weighing on prices. China, India, and Turkey have already rotated out of Russian crude, but that could reverse fast if supply reopens.

What’s Moving the Needle

On the supply side: Ukraine hit Russia’s largest refinery in Ryazan for the second time; U.S. crude inventories fell 3.4M barrels last week, but Goldman Sachs is flagging a potential 2M bpd global surplus by 2026—and the IEA warns it could be worse. China’s already hoarding, accumulating 690K bpd surplus in October as insurance.

On the macro front: Fed minutes showed officials are divided on rate cuts, and Trump’s pushing for cheaper money. Weaker dollar = oil support, but weak demand outlook = headwind.

The Real Story

This isn’t just about inventory numbers. It’s about geopolitical optionality. Markets are pricing in both scenarios—tighter supplies from sanctions and looser supplies from potential peace. The winner? Whoever blinks first on negotiations. Until then, crude stays in a friction zone, caught between supply shocks and peace signals.