- A possible peace deal could alter oil trade routes and tanker demand
- Russian crude discounts may narrow gradually, not overnight
- Any supply return is expected to be slow and uneven
Oil prices slipped below $60/bbl as markets began pricing in the possibility of a Russia–Ukraine peace agreement. The expectation is not of an immediate supply surge, but of a gradual easing of disruptions that have shaped oil and shipping markets since 2022. Sentiment has shifted faster than fundamentals, reflecting how sensitive prices are to geopolitical signals.Limited Near-Term Supply Impact
Most analysts agree that even if sanctions were eased, Russian oil production would not rebound quickly. Structural issues, including operational bottlenecks and infrastructure damage, are expected to slow any recovery. As a result, global supply additions would likely come in stages rather than as a sudden flood of barrels.
Trade Routes and Tanker Demand
A peace deal could eventually normalise trade routes, reducing the need for long-haul diversions that have boosted tonne-mile demand. Since the conflict began, Russian crude has travelled longer distances to reach Asia, increasing oil-on-water volumes and tanker utilisation. A gradual return to shorter routes would ease this pressure, though changes are expected to take time.
Freight and Product Market Effects
Freight rates for refined products have risen since the war due to sanctions and rerouting. If shipping patterns stabilise, freight costs could soften, which may also reduce refining margins. However, with refinery outages still present and product markets tight, any easing is likely to be uneven across regions and segments.
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Source: SP Global
