Oil flat as Russia-Ukraine peace hopes fade, Yemen tensions rise

Oil was steady after a choppy session on Tuesday as investors weighed dented hopes of a Russia-Ukraine peace deal and rising geopolitical tensions in the Middle East around Yemen.

Brent crude futures for February delivery, which expire on Tuesday, settled down 2 cents, or 0.03 per cent, at US$61.92 a barrel.

US West Texas Intermediate crude settled down 13 cents, or 0.22 per cent, at US$57.95.

On Monday, both benchmarks settled more than 2 per cent higher as Saudi Arabia launched airstrikes against Yemen and after Moscow accused Kyiv of targeting a Russian presidential residence, denting hopes of a peace deal.

“This latest stumbling block could see a risk premium return to the commodity, keeping prices in no man’s land,” said Tudor, Pickering Holt analyst Matt Portillo in a note on Tuesday of the purported attack on Russian President Vladimir Putin’s home.

Russia has said it will toughen its position in peace talks after accusing Kyiv of attacking the residence, an allegation that Kyiv dismissed as baseless and designed to undermine peace negotiations.

“The peace agreement between Russia and Ukraine could be delayed further, which is supportive to prices,” said Dennis Kissler, senior vice-president of trading at BOK Financial, adding that the actual effect on crude exports remains minimal.

The ongoing US blockade of Venezuelan oil and suspension of Caspian CPC Blend exports because of poor weather supported prices on Tuesday, said UBS analyst Giovanni Staunovo.

Middle East tensions

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Adding to supply concerns were strikes by a Saudi Arabia-led coalition on what it described as foreign military support to UAE-backed southern separatists in Yemen.

Saudi Arabia said on Tuesday that its national security was a red line and backed a call for UAE forces to leave Yemen within 24 hours, shortly after a Saudi-led coalition carried out an airstrike on the southern Yemeni port of Mukalla.

The UAE said it was disappointed with Saudi Arabia’s statement and surprised by the airstrikes on Mukalla.

The UAE’s Defence Ministry said later that it has voluntarily ended the mission of its counterterrorism units in Yemen, the only remaining forces it has in the country after ending its military presence in 2019.

Traders also watched other Middle East developments after US President Donald Trump said that the United States could support another major strike on Iran were Tehran to resume rebuilding its ballistic missile or nuclear weapons programmes.

Despite renewed fears of potential supply disruptions, perceptions of an oversupplied global market remain and could cap prices, analysts say.

Prices are likely to trend downwards in the first quarter of 2026 because of a “growing oil glut”, said Marex analyst Ed Meir. REUTERS

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