Oil prices were volatile in early trading on Monday after Donald Trump claimed that Russia and Ukraine had entered an "energy ceasefire", as the US president strains to bring down fuel costs ahead of midterm elections. Brent crude, the international benchmark, dropped as much as 2.3 per cent before recovering to trade down 0.1 per cent at $104.68. US heating oil futures, the country's benchmark for diesel prices, were down 3 per cent to $4.60 a gallon.
The volatile trading came after Trump said on Sunday there had been an "energy ceasefire" in the war in Ukraine. Despite the US president's announcement, it was unclear if any "energy ceasefire" would take effect. Ukrainian President Volodymyr Zelenskyy said on Sunday that it was "important that it [the energy ceasefire] becomes a reality", adding that Russian forces had attacked a power plant in Kharkiv that evening.
It was not immediately clear whether Russia had agreed to Trump's deal. The Trump administration has threatened to stop the procurement system that provides Ukraine with weapons to press Kyiv to halt its deep strikes on Russian energy infrastructure. High oil and diesel prices are hitting the popularity of Trump and his Republican Party ahead of US midterm elections in early November.
Anthony Yuen, head of energy strategy at Citigroup, noted that Republican-leaning districts "tend to consume more diesel". Wei Li, head of multi-asset investments at BNP Paribas Securities China, said optimism around the agreement with Putin had helped bring down US heating oil futures. Houthi forces launched missile strikes on Riyadh's international airport on Saturday, killing at least 12 people and injuring more than 300.
A second strike on Sunday killed one person and injured 11 others. Yuen added that last week's resumption of Chinese refined oil product exports was adding further support to the fall in diesel prices.
Source: Financial Times Companies · Summarized by HeadlinesBriefing