By: Economy Middle east

Oil prices declined on Tuesday, pressured by advancing Russia-Ukraine peace negotiations and disappointing economic indicators from China, the world’s top oil consumer. Brent crude and West Texas Intermediate futures extended recent losses as markets weighed potential supply increases against softening demand. Traders monitored diplomatic developments closely amid broader supply-demand balance concerns. 

Brent crude futures fell in early trading to $60.16, building on a more than 4 percent weekly drop that positioned benchmarks around $61 per barrel for Brent and $57-$58 for WTI. As of recent sessions, WTI hovered near $56.26 per barrel, up slightly from intraday lows but down 3.81 percent over the past month. This marks a continuation of downward trends since early December highs above $63, with prices dipping to $61.01 on December 11 before stabilizing modestly.

Weak intraday support came from U.S. inventory draws, but these failed to offset bearish sentiment. Over the last ten days leading into Tuesday, volatility persisted with peaks at $63.93 on December 5 and troughs around $61, reflecting supply chain strains and geopolitical shifts. 

Russia-Ukraine peace talks impact

Prospects for a Russia-Ukraine peace deal strengthened, raising fears of eased sanctions on Russian oil exports and higher global supply. Negotiations advanced under U.S. President Donald Trump’s mediation, with envoys engaging Russian President Vladimir Putin and Ukrainian officials separately, despite ongoing missile strikes and territorial disputes. Analysts project that sanction relief could reintegrate 1.2 million barrels per day within 12-18 months, potentially stabilizing prices in a $45-$55 range long-term.

Market reactions echoed earlier dips in November when talks first gained traction, with oil falling 3 percent amid similar optimism. India’s reduced Russian oil purchases and U.S. interest rate cut expectations added layers, though battlefield losses and corruption issues in Ukraine tempered hopes for swift resolution. Tuesday’s slip aligns with this pattern, as investors prioritized supply glut risks over short-term disruptions. 

China’s economic slowdown weighs in

China’s factory output growth slowed to a 15-month low, while retail sales hit their weakest expansion since December 2022, fueling demand worries. These figures highlight faltering export reliance amid sluggish domestic consumption, exacerbated by electric vehicle adoption curbing petroleum use. Oil demand in China is expected to remain “subdued” through mid-2026, with 2026 marking one of the lowest growth rates in years. 

OPEC‘s latest Monthly Oil Market Report held 2025 global demand growth steady at 1.30 million barrels per day, led by China, Africa, and the U.S., but flagged close supply-demand balance into 2026 without a glut. November OPEC+ output rose slightly to 43.07 million barrels per day, aligning with steady call-on-OPEC+ estimates.