Market News

(Bloomberg) -- Oil pushed lower after Ukrainian President Volodymyr Zelenskiy agreed to work on a peace plan, as US sanctions on two Russian oil giants took effect on Friday.

Brent declined for a third session to trade below $63 a barrel, while West Texas Intermediate was near $58. The plan was drafted by the US and Russia and Zelenskiy expects to talk with President Donald Trump in the coming days. Proposals include Ukraine ceding territory and the removal of sanctions.

European diplomats expressed skepticism about any deal, noting that Russian President Vladimir Putin has a track record of appearing to accept overtures when under pressure. The Kremlin is trying to stop US penalties targeting the nation’s two largest oil companies, Rosneft PJSC and Lukoil PJSC.

Still, if there is progress on a peace deal and sanctions are removed, that would add more supply to a market facing a large surplus next year. OPEC+ and other producers, most notably from the Americas, have ramped up output, with the bearish outlook putting oil prices on track for an annual loss.

“A peace plan takes some of the geopolitical heat out of crude, but it’s not a game changer,” said Haris Khurshid, Chicago-based chief investment officer at Karobaar Capital LP. “Until something concrete happens, it’s more of a knee jerk move than a structural shift.”

The sanctions on Rosneft and Lukoil could leave nearly 48 million barrels of oil stranded on the water. India refiners are seeking alternatives after years of taking the cheaper crude, including Reliance Industries Ltd., which has said it will stop processing Russian grades at part of its major Jamnagar refinery.