Brent near $107 as Russia breaches Trump's energy truce

Brent crude settled near $107 on Monday, its strongest close since mid-September, after Zelenskyy said Russia had already broken the energy ceasefire Trump announced.

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Brent crude futures settled near $107 a barrel on Monday, October 12, the highest close since mid-September. Traders priced in doubts about the "energy ceasefire" President Donald Trump announced over the weekend. Ukrainian President Volodymyr Zelenskyy said in Warsaw that Russia had breached the arrangement within two days. He said Russian forces attacked six Ukrainian energy facilities that day. A Russian drone also struck a 25-story residential building in Kyiv's Darnytskyi district on Monday night, killing one woman and injuring at least five other people.

The crude oil price reaction was compounded by a separate supply threat. Iran reported that a third crude supertanker had been hit and caught fire in the Strait of Hormuz.

What Happened to the Energy Ceasefire?

The ceasefire has not taken hold: Russian strikes on Ukrainian energy sites continued within hours of Trump's announcement on October 11.

Zelenskyy told the Warsaw Security Forum that Kyiv was "horribly surprised" by strikes on a power plant in Kharkiv, a gas production facility and a civilian gas station. Ukraine had not been consulted before the announcement, but he said Kyiv was ready to agree to a halt on energy strikes. He said Ukraine refrained from hitting Russian refineries and the wider Russian energy sector for two days, while Moscow kept attacking Ukrainian energy and critical infrastructure.

Kremlin spokesman Dmitry Peskov declined to say whether Russia had accepted the truce, saying only that "contacts are ongoing." He also rejected Ukraine's offer of a 60-day truce paired with presidential elections. Moscow said it would pause attacks for a single day to allow a vote.

Trump maintained the ceasefire was in place, saying the two sides "agreed" because he told them to. Asked about the Russian strikes, he said there had been "violations on both sides."

Why Did Brent Crude Climb to Its Strongest Close Since September?

Brent rose because two supply risks hit at once: a collapsing Russia-Ukraine energy truce and escalating attacks on Gulf shipping. Brent traded above $107 on Monday for the first time since September 29, then settled near that level. US benchmark West Texas Intermediate gained about 40 cents to roughly $94, its strongest close since late September.

Prices turned higher after Zelenskyy's comments. Brent had been about 1.5% lower earlier in the session. The Hormuz tanker fire added to the premium. Roughly a fifth of global oil consumption normally passes through the strait, so any disruption there moves prices quickly.

Russia and Ukraine matter to oil markets through refined products as well as crude. Ukrainian drone strikes on Russian refineries and export terminals have tightened diesel and other product markets. A functioning energy truce would have removed one source of supply loss. Its failure keeps that risk in prices.

How Did Oil Trade After the Initial Spike?

Oil gave back part of the gain on Tuesday. Brent settled near $106, down almost $1 or about 1%, while WTI edged up about 40 cents to near $94.

The pullback reflected hopes of a US-Russia arrangement on diesel exports that could release more supply from Moscow. Offsetting that, loud explosions were reported near Saudi Aramco's headquarters in Dhahran on Tuesday night, adding to concern about Gulf energy infrastructure amid the conflict between Saudi Arabia and Yemen's Houthis. OPEC data showed Saudi Arabia lifting crude output to about 8.4 million barrels per day, up from about 6.2 million in August, a recovery that has so far not offset the geopolitical premium.

Geopolitical Dimension

The dispute shows how far a US-announced truce can run ahead of the parties. Washington has framed the energy ceasefire as a step toward wider talks. Russia has avoided a commitment while keeping up its air campaign against Ukrainian power and gas assets. Ukraine has offered to halt strikes on Russian energy sites but says it will not do so one-sidedly.

For energy markets, the central question is whether either side formalizes terms. A verified halt would ease pressure on Russian refining and Ukrainian power generation, and would likely reduce risk premiums in diesel markets. Continued strikes on both sides leave refinery outages and export disruptions as a live risk through the winter heating season.

What Comes Next for Oil Prices?

Oil prices depend on whether the truce is confirmed or collapses, and on the Gulf security situation. Brent has held above $105 this week, with the $107 level from Monday's close now the near-term reference point.

Three developments will matter over the next three to twelve months:

• Truce verification: Public confirmation from Moscow, or a lack of it, would set expectations for Russian and Ukrainian energy infrastructure.
• Diesel export talks: A US-Russia agreement could add supply to a tight product market.
• Gulf shipping and infrastructure: Further tanker incidents in Hormuz or strikes near Saudi facilities would add to risk premiums regardless of events in Ukraine.

Higher fuel costs also feed into inflation readings and into the margins of refiners and airlines, which makes the oil price a factor in central bank deliberations.

Outlook

Brent's close near $107 reflects a market pricing the failure of the Trump-announced truce alongside new risks in the Gulf. Russia's strikes on Ukrainian energy sites and the Kyiv apartment attack have undermined the ceasefire. Moscow's refusal to confirm it leaves the arrangement unverified. Oil is likely to stay volatile and responsive to headlines from Kyiv, Moscow and the Gulf in the coming weeks.