(RTTNews) – Crude oil slumped on Friday due to oversupply concerns as Ukraine expressed support for the new 28-point peace plan formulated by the U.S. to stop the Russia-Ukraine war even as U.S. sanctions on Russian oil exports takes effect beginning today.
WTI Crude Oil for January delivery was last seen trading down by $0.86 (or 1.46%) at $58.14 per barrel.
The sanctions imposed by the U.S. on Russian oil exports to halt its military aggression on Ukraine take effect from today. The U.S. has primarily targeted two Russian oil majors, Rosneft and Lukoil.
U.S. President Donald Trump also warned that nations purchasing Russian oil would be imposed hefty “penalty tariffs.”
Three major purchasers of Russian oil, China, India, and Turkey, have already begun searching for alternate sellers.
These sanctions are set to leave around 48 million barrels of Russian crude oil at sea while the tankers search for destinations and this has sparked oversupply concerns.
Aside from imposing sanctions, the U.S. is also pursuing diplomatic means to bring the Russia-Ukraine war to an end.
Trump’s administration has prepared a 28-point peace plan, the draft of which is being deeply analyzed by Ukraine and Russia as well as a few other countries in Europe.
Ukraine President Volodymyr Zelenskyy has offered to work constructively with the U.S. to end the war on any plan that does not affect his country’s “national interests.”
Russia has not officially given any response so far.
According to emerging reports, both countries have to agree to make a lot of compromises for the draft to become a deal.
As Ukraine may have to concede a large part of its territory captured by Russia, traders were earlier doubtful of the deal coming through. However, Ukraine’s initial response has triggered expectations that the drawn out war could end sooner-than-expected.
The agreement when implemented would result in a surge of Russian oil into the markets.
The Gaza Peace Plan proposed by Trump to halt the war between Israel and Palestinian Hamas has successfully completed the first phase. Measures to implement the next phase of the plan are ongoing.
The Gaza plan’s success has prompted Trump to come up with a similar plan for a speedy resolution of the Russia-Ukraine conflict.
In the U.S., yesterday’s non-farm payrolls and labor data showed a mixed job market.
The minutes of the Fed’s October meeting that were recently released revealed divergent perspectives from Fed officials on the economy, jobs, and interest rates.
CME Group FedWatch Tool is currently indicating that traders are betting on a 69.7% chance of a 25-basis-point rate cut in December.
OPEC is committed to its plans to boost output by 137,000 barrels per day in December, adding pressure to oil prices.
In addition, an appreciation in the value on U.S. dollar also weighed on crude oil prices.
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