Brent Slips Below $107 as Trump's Russia-Ukraine Energy Ceasefire Eases Supply Fears

Key Takeaways

• UKOUSD trades at $106.969 after falling 1.68%, with an intraday high of $108.718 and low of $105.433.
• US President Donald Trump announced an energy ceasefire between Russia and Ukraine, but Moscow has not publicly confirmed its participation.
• Ukrainian President Volodymyr Zelenskyy said he is awaiting details of the proposed agreement.
• Houthi attacks on Saudi Arabia, including deadly strikes on Riyadh's international airport, continue to raise regional stability and supply concerns.
• Traders are watching $106.80 support, with $107.00–$107.05 as the key resistance zone.

Oil prices retreated on Monday as Trump's announcement of an energy ceasefire between Russia and Ukraine raised expectations of fewer disruptions to Russian energy supplies.

The announcement followed a separate US-Russia agreement intended to bring additional Russian diesel to the market. However, it has not yet been translated into a confirmed agreement between Kyiv and Moscow, leaving the market exposed to a quick reversal.

Why Traders Are Watching Oil

If the proposed ceasefire is implemented, it may ease the supply concerns that have supported oil prices in recent months. Without confirmation from both governments, though, the market's response could quickly unwind.

At the same time, Houthi forces have intensified attacks on Saudi Arabia. Strikes on Riyadh's international airport over the weekend killed at least 12 people on Saturday, with another fatality reported after Sunday's attack. The attacks have renewed security concerns, particularly as tanker incidents near the Strait of Hormuz continue to threaten energy transportation routes.

The latest attacks have not been shown to cause equivalent losses in oil production, but the risk of disruptions to shipping, insurance costs and export infrastructure remains a source of support for crude prices.

Key factors influencing UKOUSD include:

• Russia-Ukraine ceasefire: Confirmation from both governments could ease supply concerns, while a breakdown could revive them.
• Middle East security: Houthi attacks and tanker incidents near the Strait of Hormuz threaten energy transportation routes.
• US inflation data: CPI due Wednesday, 14 October, could shape Federal Reserve expectations and dollar strength.
• Fed policy: The October policy meeting remains on traders' radar.

Key Trading Levels

Despite the broader decline, UKOUSD recovered from around $106.40 towards $107.00 during the visible trading window. The rebound shows buyers remain active at lower prices, although the wider decline suggests selling pressure has not fully subsided.

The $107.00–$107.05 area is the immediate resistance, marking the recent intraday peak and a psychological barrier. Prices briefly moved above it before retreating, suggesting sellers remain active near the upper boundary of the range. Resistance also sits around $106.85–$106.90.

On the downside, $106.80 is the first area where buyers may try to defend the recovery. A break below could expose $106.60–$106.65, followed by the earlier lows near $106.40–$106.45.

A bullish scenario could develop if UKOUSD holds above $106.80 and breaks through $107.00–$107.05, potentially opening the way towards $107.20 and $107.40. A bearish scenario could emerge if it fails near $107.00 and slips below $106.80, with a break under $106.60 bringing $106.45–$106.40 into focus.

Brent Prediction: Can Oil Hold Above $106?

The next move depends on whether the ceasefire is confirmed and whether Middle Eastern tensions escalate.

Attacks on energy facilities, prolonged tanker disruptions or a breakdown in ceasefire talks could revive supply fears, and stronger global demand could also support prices. On the other hand, confirmation of the ceasefire, additional Russian fuel supplies, improving Middle Eastern shipping conditions or weaker economic data could weigh on prices.

Higher-than-expected US CPI could reinforce expectations of restrictive Fed policy and support the dollar, adding pressure to dollar-denominated commodities such as oil. The wider picture remains vulnerable to abrupt reversals.

For a deeper analysis of UKOUSD's technical levels, geopolitical catalysts and potential scenarios, read this article.