- Oil costs surged practically 3% after peace talks between Ukraine and Russia collapsed, renewing market considerations over long-term sanctions and provide constraints on Russian oil.
- Merchants are balancing the potential for added provide from US-Iran nuclear talks in opposition to heightened dangers from joint naval drills and tensions across the Strait of Hormuz, contributing to cost swings.
- A localized European vitality dispute escalated after Hungary halted diesel shipments to Ukraine, calling the Ukrainian blockage of Russian oil transit “political blackmail,” and is now searching for different provide routes by way of Croatia.
Oil costs surged practically 3% on Wednesday after peace talks between Ukraine and Russia in Geneva ended abruptly after solely two hours. The failure to achieve a breakthrough heightened market fears that sanctions and provide restrictions on Russian oil will persist longer than beforehand anticipated. Brent crude for April supply was up 2.74% to commerce at $69.15 per barrel at 8.20 am ET in Wednesday’s morning session whereas WTI crude for March supply gained 2.79% to alter fingers at $64.05 per barrel.
Ukrainian President Volodymyr Zelenskiy known as the talks “troublesome” and mentioned Russia was dragging its toes relatively than transferring significantly towards ending the conflict, now in its fourth yr. Earlier than the breakdown, merchants had began to consider the potential for a “peace dividend”, by which Russian crude may circulation extra freely again into world markets. When the negotiations stalled, that expectation pale, and oil costs moved increased as geopolitical threat returned to the forefront.
Merchants are additionally centered on Iran. U.S.-mediated nuclear talks may ultimately result in some sanctions reduction and permit extra Iranian crude onto the market. On the identical time, joint naval drills with Russia and renewed rigidity across the Strait of Hormuz, by way of which about 20% of world oil provide passes, are protecting provide dangers in view. That steadiness between doable extra barrels and potential disruption is including to cost swings.
In the meantime, tensions stay excessive following stories that Hungary has halted diesel shipments to Ukraine till crude flows by way of the Druzhba pipeline are absolutely restored. Hungarian International Minister Péter Szijjártó introduced that the cessation is a direct response to the halt of Russian oil transit by way of Ukraine, which has been blocked since January 27, 2026.
Hungary has known as the halt in crude shipments “political blackmail” by Ukraine and insists there isn’t any technical cause the transit can not restart. To safe provides, Hungary’s MOL Group has requested to faucet about 250,000 tons of strategic crude reserves and is transferring Russian oil by way of Croatia through the Adriatic pipeline. Slovakia has additionally warned that continued disruption may have an effect on gasoline imports and drive limits on exports.
Including to the pressure, Croatian Prime Minister Andrej Plenkovi? has voiced reservations about growing the transit of Russian crude to Hungary by way of Croatia’s territory, suggesting that any expanded use of the Adriatic pipeline may face political scrutiny in Zagreb.
By Alex Kimani for Oilprice.com
