Oil may fall to $50 if Russia-Ukraine conflict de-escalates - Citigroup

A reduction in the intensity of Russia's conflict against Ukraine could send oil prices down to $50 a barrel, Eric Lee, senior commodities strategist at Citigroup, said in an interview with Bloomberg.

According to the analyst, the reduction of retaliatory Ukrainian attacks on Russian refineries, as well as the weakening of diplomatic pressure on potential buyers of Russian oil may "accelerate the realization of the bearish scenario" of Citi. It was presented in August and assumes that by the end of the year the cost of oil will fall just to $50 per barrel, while in the baseline scenario the benchmark is $60.

Since the beginning of the year, Brent oil has fallen in price by about 18%. This is due to the fact that the market has grown oversupply, explains Bloomberg. In trading on October 17, quotations rose by about 0.5% - to $61.3 per barrel, according to data from the Intercontinental Exchange.

The price drop of about $10 poses a threat to the U.S. shale industry, where a higher price is needed to continue production than some state-owned companies in other countries, Bloomberg explained. It also raises the question of whether OPEC's de facto leader, Saudi Arabia, will again defend prices or accept Washington's position in favor of cheaper oil, Lee explained.

"The willingness to use oil as a foreign policy tool may be higher at these price levels," the analyst said. - If oil were at $80, there would be less willingness to provoke Iran or Russia at the risk of causing a price spike. But at $60, and even more so at $50, the White House may feel more confident and take steps that could destabilize the oil market."

Traders are closely following the talks, where the US is trying to achieve a ceasefire, and expect a possible meeting between US President Donald Trump and Russian President Vladimir Putin in Budapest. A breakthrough in those talks could lead to an easing of Western restrictions against Russia's energy sector, Bloomberg writes. However, Trump himself admits that Putin may just be stalling for time.

Trump and Putin agreed on new face-to-face talks by phone on the eve of Ukrainian President Vladimir Putin's visit to Washington. Trump called the meeting with him, held on October 17, "very interesting and friendly." However, neither leader mentioned any agreements on strengthening US support for Kiev, Bloomberg writes.

Zelensky said after the meeting that he and Trump had discussed "long-range weapons" - apparently referring to Tomahawk missiles, Reuters explains. However, according to the Ukrainian president's words, the two sides did not reach an agreement. "We talked, of course, also about long-range [missiles]. But I don't want to make statements on this topic. We decided not to talk about it because ... The United States does not want escalation and so on," Zelensky said as quoted by the agency. He also said that at the meeting the sides discussed security guarantees for Ukraine.

"I told him - just as I urged President Putin to do: it's time to stop the killing and make a Deal!", Trump wrote on Truth Social after his meeting with Zelensky.

This article was AI-translated and verified by a human editor