Oil prices fell 1% on Tuesday (December 2nd) as the market weighed fading hopes for a Russia-Ukraine peace deal and concerns about oversupply.

Brent crude futures closed 72 cents lower, or 1.14%, at $62.45 a barrel, while U.S. West Texas Intermediate crude fell 68 cents, or 1.15%, to $58.64 a barrel.

Both benchmarks rose more than 1% on Monday. Investors shifted their focus to Russia-Ukraine peace talks as Russian President Vladimir Putin met with U.S. President Donald Trump's special envoy, Steve Witkoff, and his son-in-law, Jared Kushner, in the Kremlin on Tuesday.

"Oil prices were subdued amid expectations of a breakthrough in the Ukraine peace talks that could lead to the lifting of Russian supply restrictions," said Clayton Seigle, senior fellow at the Center for Strategic and International Studies. "But those hopes are likely to be dashed, and the market faces the risk of further disruption as energy remains a target for attacks from both sides."

MIXED RHETORIC ON RUSSIAN OIL

Just before the meeting, Putin warned European powers that if they started a war with Russia, Moscow would be ready to fight. Putin also threatened to cut off Ukraine's access to the sea in response to drone attacks on Russian "shadow fleet" tankers in the Black Sea.

Putin will begin a two-day visit to India starting Thursday, promoting more sales of Russian oil, missile systems, and fighter jets in an effort to restore energy and defense ties impacted by US pressure on the South Asian nation.

"The mixed rhetoric led to a slight decline in oil prices, which initially indicated confidence that Russia would continue to be an oil supplier to India," said Phil Flynn, senior analyst at Price Futures Group. However, Putin's comments suggest that a peace deal may not be as close as the market had hoped, Flynn said.

Recent concerns about oversupply, which have weighed on prices, have been offset by attacks on Russian infrastructure over the weekend and tensions between the U.S. and Venezuela.

On Monday, the Caspian Pipeline Consortium said it had resumed oil shipments from a mooring point at its Black Sea terminal following a large Ukrainian drone attack on Saturday.

A Russian-flagged tanker carrying sunflower oil reported a drone attack off the coast of Turkey on Tuesday.

Trump said over the weekend that the airspace over and around Venezuela should be considered closed, fueling new uncertainty in the oil market, as the South American nation is a major producer.

OPEC+ agreed to leave oil production levels unchanged for the first quarter of 2026 at its meeting on Sunday as the group slowed its efforts to regain market share amid concerns about a looming oversupply. (alg)

Source: Reuters.com