By: Creamer media

Oil prices declined on Thursday as markets shifted their attention back to the Russia-Ukraine peace talks and monitored the potential repercussions from the U.S. seizure of a sanctioned tanker near Venezuela.

As of 5:47 GMT, Brent crude slipped by 15 cents, or 0.24 percent, to $62.06 a barrel, while U.S. West Texas Intermediate edged down 11 cents, or 0.19 percent, to $58.35.

Oil prices had closed higher in the previous session after the United States confirmed it had seized an oil tanker off Venezuela’s coast, a move that heightened tensions between the two countries and sparked renewed worries over potential supply disruptions.

Russia-Ukraine peace talks reach “critical moment”

On Wednesday, U.S. President Donald Trump said, “We’ve just seized a tanker on the coast of Venezuela, large tanker, very large, largest one ever, actually, and other things are happening.”

Officials in the Trump administration did not disclose the name of the vessel, though the UK-based risk management firm Vanguard reported that the tanker identified as Skipper was likely the one seized off the coast of Venezuela.

“The oil market is entering 2026 with an unusual mix of short-term comfort and long-term unease. On the surface, supply looks ample. Inventories have risen, demand growth has cooled, and parts of the curve trade with enough softness to keep macro-focused traders relaxed. But beneath that veneer sits a deeper structural tension that has only grown clearer over recent months: the world still needs large volumes of new oil supply well into the coming decades, and current price levels are probably not sufficient to incentivise it,” said Ole Hansen, head of commodity strategy, Saxo Bank.

Investors also shifted their attention to progress in the Russia-Ukraine peace negotiations. The leaders of Britain, France and Germany held a call with President Trump to review Washington’s latest diplomatic push to end the war, describing the talks as entering a “critical moment.”

Meanwhile, reports that Ukraine had struck a vessel belonging to Russia’s so-called shadow fleet provided some short-term support for oil prices. Analysts noted that these factors are expected to keep crude trading above the $55 support level through the end of the year, unless an unexpected breakthrough is reached in the Ukraine peace negotiations.

Fed cuts interest rates

In other developments, a sharply split Federal Reserve cut its benchmark interest rate, a move that could lower borrowing costs, stimulate economic activity and, in turn, support oil demand and prices.

At the same time, a decline in U.S. crude stockpiles added a further lift to oil prices, even though the drawdown came in below expectations. U.S. crude inventories fell by 1.8 million barrels to 425.7 million barrels in the week ending December 5, according to the Energy Information Administration’s latest Petroleum Status Report.

“This tension is visible already in how the market is treating next year’s supposed surplus. The IEA’s projection of a potential 4 mb/d oversupply in 2026 has stirred debate, but it remains hard to find evidence of such a large overhang in actual market pricing,” added Hansen.

He noted that a “genuine glut” would normally force the futures curve into a deep contango, boost storage economics and generate visible stock buildups across major hubs.

“For now, the curve remains relatively flat, not flipping into a contango until October next year, suggesting that while Q1 may feel heavy as the market digests the inventory overhang built in late 2025, it is not pricing a structural oversupply. In other words, a soft patch is likely, but not a repeat of the 2020–21 imbalance,” he said.