Oil markets proved largely unreactive to a Russian pledge to enact a three-day ceasefire in Ukraine next month, as US President Donald Trump has expressed frustration at piecemeal proposals and made relaxed sanctions measures look less likely.
A statement from the Kremlin on April 28 announced a three-day ceasefire in Ukraine from May 8 to May 11 to mark the 80th anniversary of the Soviet Union’s victory in World War II, citing a directive from President Vladimir Putin.
Oil market participants have been closely watching peace talks between Russia and Ukraine, seeing a breakthrough as a first step toward the US and other jurisdictions relaxing their Russian sanctions and potentially returning oil supplies to legacy markets.
Yet a series of short-term ceasefire proposals has sapped hopes for a fast and comprehensive peace advanced by the US, and Trump has shown growing impatience with brokering a stalling deal.
Responding to the Russian ceasefire commitment in an April 28 press briefing, White House press secretary Karoline Leavitt said that US President Donald Trump had become “increasingly frustrated with leaders of both countries” and stressed the need for a full and comprehensive ceasefire to advance peace.
“While he remains optimistic that he can strike a deal, he’s also being realistic as well,” she told reporters.
A statement from Ukrainian President Volodymyr Zelensky on April 28 dismissed the proposal as lacking substance, saying a credible ceasefire must be “immediate, full, and unconditional — for at least 30 days.”
“I am still somewhat skeptical of a lasting ceasefire,” said Rachel Ziemba, a senior adviser at Horizon Engage. “Why announce a short ceasefire when continuing offensive attacks?”
June ICE Brent Crude futures proved broadly unreactive in the immediate aftermath of the announcement around 11:30 GMT, hovering at around $67/b for several hours after the statement.
Platts, part of S&P Global Commodity Insights, last assessed the discount of Russia’s flagship crude, Urals, to Dated Brent at $13/b April 25, compared with $15.40/b Feb. 25.
Previous breakdowns
Both Russia and Ukraine have already accused one another of violating previous partial ceasefire deals, including a recent 30-hour Easter truce, and a pause on attacks targeting rival energy infrastructure.
However, while both sides have continued to launch drones across the border, a flare-up in Ukrainian attacks targeting Russian oil refineries and pipeline infrastructure appears to have recently dissipated, removing a previous source of price support to refined products markets.
Despite its status as one of the world’s most heavily sanctioned countries, Russia remains one of the world’s largest oil exporters. Significant volumes of crude still flow to Asian markets, and refined products are exported across the globe.
According to Donald Trump’s “Liberation Day” tariff announcements on April 2, Urals prices have also kept well below the $60/b threshold imposed by G7 countries on Russian oil exports, allowing more shippers and trade partners to legitimately move Urals crude at market price without incurring a financial penalty.
According to S&P Global Commodities at Sea(opens in a new tab) data, Russian crude exports exceeded 5.2 million b/d in March, up 5% month on month and touching a one-year high.
Global commodities trading houses have broadly expressed willingness to return to Russian markets as soon as sanctions ease, but have said that widespread rollbacks could take years to materialize given the current political environment.
Source: Reuters