(RTTNews) – Crude oil fell on Friday on oversupply concerns as Ukraine expressed support for a new 28-point peace plan drawn up by the US to stop the Russia-Ukraine war, while US sanctions on Russian oil exports take effect today.
WTI crude oil for January delivery was last seen trading at $58.14 per barrel, down $0.86 (or 1.46%).
Sanctions imposed by the US on Russian oil exports to stop its military aggression on Ukraine come into effect today. The US has mainly targeted two Russian oil companies, Rosneft and Lukoil.
US President Donald Trump also warned that huge “penalty fees” would be imposed on countries buying Russian oil.
The three major buyers of Russian oil, China, India and Türkiye, have already started looking for alternative sellers.
The sanctions are set to prevent about 48 million barrels of Russian crude from being released into the sea while tankers look for destinations and have raised concerns of oversupply.
Apart from imposing sanctions, the US is also adopting diplomatic measures to end the Russia-Ukraine war.
The Trump administration has prepared a 28-point peace plan, the draft of which is being deeply analyzed by Ukraine and Russia as well as some other countries of Europe.
Ukrainian President Volodymyr Zelensky has offered to work constructively with the US on any plan to end the war that does not affect his country’s “national interests”.
Russia has not yet responded officially.
According to the reports coming out, to make this draft a deal, both the countries will have to make many agreements.
Since Ukraine may have to give up a large part of its territory annexed by Russia, traders were initially skeptical of the deal’s completion. However, Ukraine’s initial reaction has raised hopes that the drawn-out war may end sooner than expected.
Once this agreement is implemented, the amount of Russian oil in the markets will increase.
The Gaza peace plan proposed by Trump to prevent war between Israel and Palestinian Hamas has successfully completed the first phase. Measures are underway to implement the next phase of the plan.
The success of the Gaza plan has inspired Trump to come up with a similar plan for a quick resolution of the Russia-Ukraine conflict.
In the US, yesterday’s non-farm payrolls and labor data showed a mixed job market.
The recently released minutes of the Fed’s October meeting revealed differing views from Fed officials on the economy, jobs and interest rates.
The 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 plan to increase output by 137,000 barrels per day in December, which will put upward pressure on oil prices.
Additionally, the appreciation of the US dollar also impacted crude oil prices.
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