Oil prices declined Monday after President Donald Trump announced an "energy ceasefire" between Russia and Ukraine, reducing immediate supply concerns even as Middle East tensions and hurricane risks created countervailing pressure.
Brent crude futures for December delivery fell 1.33 percent to $103.33 a barrel. U.S. West Texas Intermediate futures for November dropped 1.68 percent to $90.31 per barrel.
Trump declared on social media Sunday that Russia and Ukraine had agreed not to target each other's energy infrastructure. "Effective immediately, there is an ENERGY CEASEFIRE in the War between Russia and Ukraine. Both parties have agreed. Do not break it!" Ukrainian President Volodymyr Zelenskyy responded that Ukraine supports the ceasefire and called on Russia to do the same.
The market optimism centered on expectations of increased Russian energy supplies. Trump said Friday that Moscow would supply more than 4 million tons of diesel to the global market under a deal struck with Russian President Vladimir Putin during a phone call.
The gains remained modest due to offsetting risks. UOB, a financial services firm, noted that Hurricane Isaias strengthened to Category 3 with 120 mile-per-hour winds as it approached the U.S. Gulf Coast, forcing energy producers to curtail offshore output. The firm cited "pressure on oil prices" from this disruption.
Tensions in the Middle East also weighed on markets. Saudi Arabia's state news agency reported that Iran's Minister of Foreign Affairs Abbas Araghchi called his Saudi counterpart Faisal bin Farhan bin Abdullah to discuss regional escalation. Al Jazeera reported Araghchi said Iran was ready to provide assistance toward dialogue between Saudi Arabia and Yemen's Houthis. The Houthi missile strikes on Saudi Arabia's Riyadh airport on Saturday killed 12 people and injured over 300, UOB said, which has "materially elevated Middle East risk premia."
Oil prices are expected to remain volatile in the near term as the U.S.-Iran conflict persists and weather-related supply disruptions develop.