Oil prices slipped on Monday as markets assessed whether a proposed Russia–Ukraine energy ceasefire could ease supply constraints and increase the availability of Russian energy products. The decline offered some relief to energy markets, but Brent crude remained above $100 a barrel as geopolitical tensions elsewhere continued to threaten global supply. The latest move highlights the competing forces shaping oil prices: expectations of additional supply on one side, and persistent risks to production and transportation on the other.

Ceasefire Announcement Eases Immediate Supply Concerns

Brent crude futures fell $1.37, or 1.31%, to $103.35 a barrel by 0037 GMT on Monday. U.S. West Texas Intermediate crude declined $1.30, or 1.42%, to $90.55. The losses followed Trump’s announcement on Sunday that Russia and Ukraine had agreed to stop attacking each other’s energy facilities. The announcement came after Washington disclosed a diesel-supply deal with Moscow on Friday, adding to expectations that Russian fuel exports could help relieve pressure on international markets.

However, the proposed ceasefire remains uncertain. Ukrainian President Volodymyr Zelenskyy said he was waiting for further details, while Russia had not publicly confirmed the arrangement. Continued reports of attacks on Ukrainian energy infrastructure also raised questions about whether the announcement would translate into a sustained reduction in hostilities. Until implementation becomes clearer, traders may remain reluctant to assume that additional supplies will reach the market consistently.

Middle East Tensions Limit the Potential for Further Declines

Developments in the Middle East continue to complicate the outlook for crude prices. Houthi attacks in the region and reported attacks on tankers near the Strait of Hormuz have heightened concerns about the security of key shipping routes. Any prolonged disruption could constrain exports and offset the potential benefit of increased Russian supplies.

The Strait of Hormuz is a critical corridor for international energy trade. Threats to tanker traffic can increase freight and insurance costs, delay deliveries and raise the risk premium embedded in crude prices. Consequently, even a functioning Russia–Ukraine energy truce may not be enough to produce a sustained decline if Middle East tensions intensify or shipping disruptions spread.

Supply Expectations and Geopolitical Risks Shape the Outlook

Goldman Sachs raised its December Brent price forecast to $90 a barrel from $85 previously, while maintaining expectations that changes in Middle Eastern supply could eventually put downward pressure on prices. The bank estimated that geopolitical risks were adding slightly more than $20 a barrel to crude prices. It also forecast that WTI would average $81 a barrel in December 2026 and $73 in 2027, partly reflecting unusually high shipping costs between the United States and Europe.

Looking ahead, traders will monitor whether Russia and Ukraine establish a verifiable halt to attacks on energy infrastructure, whether Russian fuel exports increase and whether tanker traffic through the Strait of Hormuz remains secure. A sustained improvement in supply could ease energy costs and inflationary pressures, with implications for transport, manufacturing and central-bank policy. Conversely, renewed hostilities or further shipping disruptions could quickly reverse the recent decline. The durability of the oil market’s response will depend less on diplomatic announcements alone than on measurable changes in production, exports and the reliability of global energy routes.