Oil prices dropped on Monday as markets reacted to President Donald Trump's announcement of an energy ceasefire between Russia and Ukraine. Trump stated on social media that both nations have agreed not to target each other's energy facilities, which sparked optimism about improved supplies. Ukrainian President Volodymyr Zelenskyy supported the ceasefire but emphasized the need for Russia's cooperation.
The decline in oil prices was also influenced by a potential increase in Russian energy exports. Trump revealed that Russia would supply over 4 million tons of diesel to the global market under a deal he negotiated with Russian President Vladimir Putin. Meanwhile, Iran reached out to Saudi Arabia to discuss regional tensions and offered to mediate talks between Saudi Arabia and Yemen's Houthis following recent attacks.
Despite the positive developments, oil prices are expected to remain volatile. The U.S.-Iran conflict and the impact of Hurricane Isaias on U.S. energy producers could further disrupt supplies. Analysts at UOB noted that Hurricane Isaias, which strengthened to Category 3, forced energy producers to curtail offshore output. Additionally, Houthi missile strikes on Saudi Arabia's Riyadh airport elevated risks in the Middle East, potentially affecting oil markets.