Oil rises 1% on stalled Russia-Ukraine peace talks, strong US demand

Oil prices rose by nearly a dollar a barrel on Thursday as Russia and Ukraine blamed each other for a stalled peace process, and as earlier US data showed signs of strong demand in the top oil consuming nation.

Brent crude futures rose 83 cents, or 1.2 per cent, to settle at US$67.67 a barrel, a two-week high. US West Texas Intermediate crude futures gained 81 cents, or 1.3 per cent, to close at US$63.52 a barrel.

Both contracts climbed more than 1 per cent in the prior session. The path to peace in Ukraine remained uncertain, turning oil traders cautious after a selloff over the past two weeks on hopes that US President Donald Trump would soon negotiate a diplomatic end to Russia’s war with its neighbor.

Both Moscow and Kyiv have since blamed each other for stalling the peace process. Russia on Thursday launched a major air attack near Ukraine’s border with the European Union, while Ukraine claimed to have hit a Russian oil refinery.

“Some geopolitical risk premium is slowly being pumped back into the market,” oil trading advisory firm Ritterbusch and Associates told clients on Thursday. The uncertainty in the peace talks means that the possibility of tighter sanctions on Russia has resurfaced, said Tamas Varga, an analyst at PVM Oil Associates.

Oil prices were also supported by a larger-than-expected drawdown from US crude stockpiles in the last week, indicating strong demand. US crude stockpiles fell 6 million barrels in the week ended Aug 15, the US Energy Information Administration reported on Wednesday, while analysts had expected a draw of 1.8 million barrels.

“These tight domestic stockpiles stand in contrast to the oversupply outlook projected by both the IEA and EIA for 2026, challenging traders’ broader market expectations,” StoneX analyst Alex Hodes told clients.

Investors were also looking to the Jackson Hole economic conference in Wyoming for signals on a possible Fed interest rate cut next month. The annual gathering of central bankers begins on Thursday, with Fed Chair Jerome Powell scheduled to speak on Friday. REUTERS