Oil prices dropped sharply on Wednesday following reports that the United States has presented proposals aimed at ending the Russia-Ukraine war, alongside growing concerns about a looming oversupply in the market.
Brent crude fell by $1.72, or 2.65%, to $63.17 per barrel by 14:21 GMT, reversing gains from the previous session. U.S. West Texas Intermediate (WTI) also declined by $1.65, or 2.72%, to $59.09 after Tuesday's 1.4% rise.
A senior Ukrainian official told Reuters that Kyiv had received early "signals" of U.S. peace proposals being discussed with Moscow. Ukrainian President Volodymyr Zelenskiy was also expected to hold talks in Turkey on Wednesday and meet U.S. Army officials in Kyiv on Thursday as part of renewed peace efforts.
Analysts say any breakthrough in negotiations could significantly reduce geopolitical risks affecting global oil supply.
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Saxo Bank's Ole Hansen noted that successful talks would dampen oil supply fears. Meanwhile, Russian Deputy Prime Minister Alexander Novak said U.S. sanctions on Rosneft and Lukoil, imposed after previous peace efforts stalled, had not affected Russia's oil production.
The U.S. Treasury, however, maintained that the sanctions—set to take full effect on November 21—are expected to squeeze Russia's oil revenues and lower export volumes. Buyers in China and India have reportedly begun shifting to alternative suppliers ahead of the deadline.
Rystad Energy analyst Janiv Shah said sanctions pressure is nearing its peak, adding that without a geopolitical premium, market attention is shifting back to weak fundamentals.
Oversupply worries persisted as U.S. crude inventories rose by 4.45 million barrels last week. Gasoline stocks increased by 1.55 million barrels, while distillates gained 577,000 barrels, according to figures from the American Petroleum Institute.
