Oil prices edged lower on Wednesday after Russia agreed to US President Donald Trump's proposal that Moscow and Kyiv temporarily stop attacking each other's energy infrastructure, a move analysts say could eventually pave the way for Russian oil to enter global markets.
Brent crude futures slipped 11 cents, or 0.16%, to $69.97 a barrel at 1130 GMT. US West Texas Intermediate crude (WTI) was down 12 cents, or 0.18%, at $66.78.
Russian President Vladimir Putin agreed on Tuesday to stop attacking Ukrainian energy facilities but stopped short of endorsing a full 30-day ceasefire that Trump hoped for.
"Crude prices softened on signs of progress towards a ceasefire deal in Ukraine, coupled with wider market weakness as traders and investors worry about the fallout from tariff wars," said Panmure Liberum analyst Ashley Kelty, Reuters reported.
"Even if a deal is struck, it will likely take some time before Russian energy exports increase in a significant way, with the short-term impact being around diversion of flows in order to attract better pricing."
Russia is one of the world's top oil suppliers, but its output has waned since the beginning of the war, which resulted in sanctions on Russian energy.
The deal reduces supply disruption risks and increases the chances for peace that could lead to an easing of energy sanctions on Russia, allowing more supply into the market, said Charalampos Pissouros, senior investment analyst at brokerage XM.
Meanwhile, US tariffs on Canada, Mexico and China have raised recession fears, which also weighed on oil prices as that would have a dampening effect on demand for crude.
Oil markets remain focused on price downside despite rising Middle East tensions, Goldman Sachs analysts said in a note on Wednesday.
Traders are awaiting the outcome of the US Federal Reserve policy meeting which will conclude later in the day.
Interest rate cuts typically boost economic activity and energy demand. However, the Fed is expected to hold its benchmark interest rate steady in the 4.25%-4.50% range, amid investor worries over an economic slowdown due to Trump's tariffs.
Trump vowed to continue his country's assault on Yemen's Houthis and said he would hold Iran responsible for any attacks carried out by the group that has disrupted shipping in the Red Sea.
Israeli airstrikes in Gaza, meanwhile, killed at least 200 people, Palestinian health authorities said, which ended a week-long ceasefire and elevated risks of oil supply being threatened from the broader region.
In the US, crude oil stocks data painted a mixed picture, with crude stocks rising while fuel inventories fell.
Crude stocks were up 4.59 million barrels in the week ended March 14, market sources said, citing American Petroleum Institute figures on Tuesday. Gasoline inventories fell by 1.71 million barrels and distillate stocks were down 2.15 million barrels, they said.
Official government data is due on Wednesday.
