Oil falls to about $103 after Trump declares a Russia-Ukraine "energy ceasefire" that covers only refineries

Brent crude futures fell $1.37, or 1.31%, to $103.35 a barrel by 00:37 GMT on Monday, according to Reuters. The drop followed President Donald Trump's announcement that Russia and Ukraine had agreed to stop attacking each other's energy facilities. Most Asian stock markets rose in early trading, and the lower oil price outweighed a new wave of Houthi attacks on Saudi Arabia. Brent held near $103 a barrel through the day, according to market data, as traders weighed the ceasefire against continued fighting.

The truce is narrower than Trump's post suggested. A White House official told Axios that the proposal covers only attacks on oil refineries, and neither government has officially confirmed it. Trump wrote that the ceasefire takes effect "from this moment" and that "both sides have agreed." Ukrainian President Volodymyr Zelensky told Axios that he first heard of the announcement from the news, but that Kyiv would welcome a truce if both sides honor it.

Within hours, Russian forces struck a power plant in Kharkiv and a power station in Kyiv, Ukrainian officials said. The strike on Kharkiv's CHP-5 combined heat and power plant and a drone attack on a Kyiv power station caused outages in several districts, the Kyiv Independent reported, and Russian forces also hit gas production facilities belonging to the state company Naftogaz in the Kharkiv region. Ukrainian drone attacks appeared to spare Russian oil refineries overnight, according to the Moscow Times, suggesting Kyiv held back while Moscow did not. Kremlin spokesman Dmitry Peskov said only that "contacts are ongoing" and that Moscow would comment when it had something to say, offering no formal confirmation of the deal.

Continued fighting in the Middle East kept oil prices from falling further. The Nation, a newspaper in Bangkok, reported Brent at $105.48 earlier on Monday as tanker attacks and the wider regional conflict continued. Reuters reported separately that the conflict has kept Brent above $100 a barrel.

Washington has few physical supplies left to release. The US Strategic Petroleum Reserve held 283 million barrels at the end of September, the lowest level since October 1982, according to Reuters data cited by OilPrice. With little left to sell from storage before the midterm elections, the administration is using diplomacy and sanctions licenses to lower fuel prices. Announcements of this kind can lower prices, but they do not add barrels.

Earlier truces of this kind did not last. After Trump announced an energy truce in mid-September, Russia and Ukraine struck each other's energy sites within 24 hours, Chinese financial portal East Money reported. Ukraine hit a refinery in Russia's Samara region, and Russia struck fuel stations in Kyiv and port warehouses in Odesa. In January, the Kremlin shortened a week-long truce that Trump had announced so that it ended on February 1.