Renewed political attention to Ukraine peace sends oil prices tumbling

Financial markets opened on November 21 to falling oil prices, which are on track for a weekly decline amid oversupply concerns and news that the US has proposed a plan to end the war in Ukraine.

In his traditional nightly address to the nation on November 20, Ukrainian President Volodymyr Zelenskyy assured that Kyiv is “geared up for clear and honest work” on developing a peace plan to end the war with Russia, following the presentation of draft proposals by US delegates.

By mid-day (GMT+4), Brent crude — the global oil benchmark — was down 1.7 per cent at $62.3 per barrel, while West Texas Intermediate (WTI), the American reference points, was trading 1.95 per cent lower at $57.84 per barrel, as recorded by Oil Price.

Zelenskyy’s apparent openness to the peace proposal coincided with the day new US sanctions on Russian oil giants Rosneft and Lukoil came into force. The measures target key subsidiaries in an effort to curb Kremlin revenues from fossil-fuel exports.

As the sanctions took effect on November 21, nearly 48 million barrels of Russian crude could be left stranded at sea on loaded tankers, Bloomberg reported, citing shipping data from analytics firm Kpler.

While the emergence of the peace plan has been accompanied by conflicting reports about the involvement of Ukrainian officials, its implementation could nonetheless heighten oversupply concerns in oil markets. 

This is especially true considering the markets are already facing increased output from Opec+ as the group seeks to reclaim market share. The coalition, led by Saudi Arabia and Russia, approved a further 137,000 bpd output increase for December before halting output increases in early 2026. Opec+ remains a key driver of bearish sentiment in the oil markets, with analysts speculating that the market may look to the alliance to curb output once more should prices continue to decline.

“We anticipate potential oversupply next year of up to two million barrels per day, which is quite substantial,” Marco Dunand, chief executive and co-founder of the Swiss commodity trader Mercuria, said during the Adipec conference in Abu Dhabi this month.

Meanwhile, Azerbaijan’s crude benchmark saw a slight rise as reports emerged of renewed US-led diplomatic momentum on a Ukraine peace deal. The domestic grade, Azeri Light, edged up 0.03%, reaching $67.69 per barrel.

Energy markets will continue watching Kyiv and Washington closely for the next major signal — one that could shape crude price movements heading into December. The war in Ukraine has unsettled global commodity markets for more than three years.

By Nazrin Sadigova