Oil Falls Below $60 as Ukraine Peace Hopes Push Prices to Lowest Since February 2021

On the morning of Wednesday, December 17, 2025, oil fell below US$60 a barrel, the lowest price since February 2021. European natural gas moved the same way. The benchmark TTF contract briefly traded below €27 per megawatt-hour, according to Intercontinental Exchange data, about 16 per cent lower than in mid-November and the lowest reading since early 2021.

The drop extends a two-week retreat. Over that stretch, Brent crude futures have lost more than 20 per cent. The source attributes the slide to investor hopes that the Ukraine conflict may be heading toward a resolution, which has softened the geopolitical risk premium traders had built into oil and gas prices over the past two years, and eased concerns about supply.

The immediate trigger was a report from Berlin that the United States has offered Ukraine NATO-like security guarantees as part of the peace discussions. Analysts read the proposal as a framework resembling NATO's Article 5, the mutual defence clause. It has drawn cautious optimism in European capitals. President Donald Trump added to the mood by telling reporters that the conflict may be closer to resolution than ever.

Jorge Leon, head of geopolitical analysis at Rystad Energy, laid out what a ceasefire could mean for the oil market. US sanctions on Russian oil companies would likely be lifted fairly quickly, he said, while European sanctions would probably come off more gradually. Attacks on Russian oil infrastructure would stop, reducing the near-term risk of supply disruption. Russian oil currently stored on water, which he estimated at almost 170 million barrels, could return to the market.

Leon also pointed to the producers' alliance. Lifting sanctions would change incentives inside OPEC+, which includes Russia, Saudi Arabia and the United Arab Emirates, making it more likely the group resumes a market-share strategy after its planned pause in the first quarter of 2026. Russia could keep raising output, and the discounts on Russian barrels would likely narrow as trade flows normalise.

He was careful not to overstate the case. Over the past year, he noted, markets have come close to pricing in a peace deal several times, only for talks to stall. The current optimism is clearly weighing on prices, but how long that lasts depends on tangible progress toward a credible and lasting agreement. Until then, he said, markets are likely to stay highly sensitive to political headlines.

On the gas side, Europe is entering the winter heating season with storage above 95 per cent of capacity, according to Gas Infrastructure Europe. Milder weather forecasts and strong renewable generation have further eased supply pressure that once threatened to reignite inflation across the continent. The European Commission credits coordinated energy procurement and diversification, including higher LNG imports from the United States and Qatar, with shielding the bloc from shortage risks.

Traders are now watching upcoming OPEC+ meetings and US inventory reports for signs of policy or output changes. Analysts say a sustained fall below US$60 could lead producers to reconsider planned production increases if negotiations falter or demand slows further. Market watchers expect prices to stay volatile but with a downward bias for as long as momentum toward a ceasefire holds.