Oil prices fell Monday after President Donald Trump announced an "energy ceasefire" between Russia and Ukraine, with both nations agreeing not to target each other's energy infrastructure.
Brent crude futures for December delivery dropped 1.33% to $103.33 a barrel. U.S. West Texas Intermediate futures for November declined 1.68% to $90.31 per barrel.
Trump declared on social media Sunday: "Effective immediately, there is an ENERGY CEASEFIRE in the War between Russia and Ukraine. Both parties have agreed. Do not break it!" Ukrainian President Volodymyr Zelenskyy responded that "Ukraine supports the ceasefire, and it is important that Russia support it as well."
The price decline reflects market expectations of increased energy supplies. Trump said Friday that Russia will supply more than 4 million tons of diesel to the global market under a deal he reached with Russian President Vladimir Putin.
Separate developments in the Middle East added complexity to the outlook. Iran's Foreign Minister Abbas Araghchi called Saudi Arabia's Foreign Minister Faisal bin Farhan bin Abdullah to discuss regional tensions and potential dialogue with Yemen's Houthis, according to the Saudi state news agency. Araghchi indicated Iran was ready to assist in opening talks between Saudi Arabia and the Houthis.
Houthi missile strikes on Riyadh airport Saturday killed 12 people and injured over 300, according to UOB. The bank noted that these attacks "have materially elevated Middle East risk premia."
Upward pressure on prices persisted from other sources. Hurricane Isaias strengthened to Category 3 with 120 mph winds as it approached the U.S. Gulf Coast, prompting energy producers to reduce offshore output. UOB said this weather threat could keep upside pressure on oil prices in the near term.
The bank added that the U.S.-Iran conflict and Hurricane Isaias impacts could keep oil prices volatile, offsetting the temporary relief from the announced energy ceasefire.