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Oil prices eased about 1.0 per cent on Tuesday as US President Donald Trump and Russian President Vladimir Putin discussed moves to end the three-year-old war in Ukraine, which could result in a possible easing of sanctions on Russian fuel exports.
Putin agreed to Trump's proposal that Russia and Ukraine cease attacking each other's energy infrastructure for 30 days.
Brent futures fell 51 cents, or 0.7 per cent, to settle at $70.56 a barrel, while US West Texas Intermediate (WTI) crude fell 68 cents, or 1.0 per cent, to settle at $66.90.
Even if the US and Russia work out a ceasefire in Ukraine, some analysts said it will likely take a long while before Russian energy exports increase in a significant way, according to Reuters.
Russia produced about 9.2 million barrels per day (bpd) of crude in 2024, down from a recent high of 9.8 million bpd in 2022 and a record 10.6 million bpd in 2016, according to US Energy Information Administration (EIA) data going back to 1997.
In addition to a possible boost to global oil supplies from Russia, economic worries related to Trump's trade tariffs also weighed on crude prices.
The Organisation for Economic Co-operation and Development (OECD) warned that U.S. tariffs would reduce economic growth in the U.S., Canada and Mexico, and weigh on global energy demand.
In the world's biggest economy, U.S. single-family homebuilding rebounded sharply in February amid a thaw in winter weather, but rising construction costs from tariffs and labor shortages threaten the recovery.
"Recession is increasingly seen as likely and tariffs have taken over as the number one threat to the economy, with numerous types of tariffs to several different countries scheduled to hit the tape on April 02," Bob Yawger, director of energy futures at Mizuho, said in a report.
Analysts at energy analytics firm Wood Mackenzie projected Brent prices would average $73 per barrel in 2025, down $7 per barrel from 2024 due to US tariff policies and OPEC+ plans to boost output.
Earlier this month, OPEC+, which includes the Organization of the Petroleum Exporting Countries (OPEC) and allies like Russia, decided to proceed with a planned oil output increase in April.
MIDDLE EAST TENSIONS
Earlier in the day, crude futures hit a two-week high on worries Middle East instability could reduce oil supplies, and hopes economic stimulus plans in China and Germany could boost demand for the fuel in two of the world's biggest economies.
In Yemen, Trump vowed to continue the US assault on the Iran-backed Houthis unless the group ends attacks on ships in the Red Sea.
Trump said he would hold Iran responsible for any Houthi attacks. If the US acts against Iran, or the Houthis act against other Arab producers, global oil supplies could decline.
Iran, an OPEC member, produced about 3.3 million bpd of crude in 2024, according to the US EIA. Analysts at J P Morgan said in a recent note that despite existing sanctions, current Iranian crude exports have remained relatively stable at around 1.7 million bpd, surpassing 2023 and 2024 levels.
Elsewhere in the Middle East, Israeli air strikes in Gaza killed over 400 people, Palestinian health authorities said, as attacks ended a weeks-long standoff over extending a ceasefire that halted fighting in January.
US OIL INVENTORIES
US oil inventory data from the American Petroleum Institute (API) trade group is due on Tuesday and the US EIA on Wednesday. ,
Analysts forecast energy firms added about 0.9 million barrels of oil to U.S. stockpiles during the week ended March 14.
That compares with a decrease of 2.0 million barrels during the same week last year and an average build of 1.6 million barrels over the past five years (2020-2024).