Oil prices stabilized after closing at a one-month low, amid signs that a peace agreement in Ukraine is nearing, a development that could pave the way for the removal of restrictions on Russian crude at a time when a supply glut is expected.
Brent crude traded near $63 a barrel after falling 1.4% on Tuesday, while West Texas Intermediate crude remained above $58.
US President Donald Trump said there were only a few points of contention remaining and sent his negotiators to further meetings, while the head of the Ukrainian leadership's office said the talks in Geneva had laid a good foundation for reaching an agreement to end the war.
Much of Russia’s oil is subject to tough Western sanctions, with US restrictions taking effect last week on the country’s two largest producers.
Difficulty in assessing the impact of lifting sanctions on Russia on prices
However, China, India and Turkey have been active buyers of discounted Russian oil in recent years, so it is difficult to assess the impact of any easing of restrictions on the Kremlin on global prices.
Huang Wanze, an analyst at Daddy Futures, said: The key question is whether a ceasefire will actually mean the lifting of sanctions.
He added: Since this ceasefire agreement is led by the United States, in an optimistic scenario, it is likely that only the United States will prioritize restoring Russian oil purchases from buyers such as India through exemptions or lighter sanctions oversight.
Oil prices have fallen by more than a fifth since mid-June, as the OPEC+ alliance has brought additional barrels back into the market and producers outside the group have boosted supplies, while consumption has remained weak. The International Energy Agency expects supply to exceed demand by a record 4 million barrels per day next year.
In the United States, a report from the American Petroleum Institute showed that US crude oil inventories fell slightly by 1.9 million barrels last week. Official data is due later on Wednesday.
