Trump administration discussing Russian deals with U.S. oil firms in Ukraine peace talks - FT

The U.S. and Russia are discussing a potential return by big American energy companies to the Russian oil market as part of wider talks to end the war in Ukraine, the Financial Times reported Tuesday.

The Trump administration has suggested that a joint venture involving U.S. and Russian oil majors could be resumed off the Sakhalin Island in the Far East, as well as a plan to resume sales of Russian oil to Europe via the Druzhba pipeline, part of a broader U.S. push to lure Vladimir Putin to the negotiating table by offering financial incentives, according to the report.

"Economic agreements would be included in and subject to a comprehensive peace framework that stops the killing in this brutal war," an unnamed U.S. official told FT, adding that nothing has been finalized and that the ventures would not happen until the war has ended.

ExxonMobil (XOM), the only U.S. company involved in the massive Sakhalin-1 project, said last year it was in talks with Russia about compensation for the seizure of its 30% stake, but has not revealed any plans to resume operations in the country.

Other proposals reportedly include resuming access for U.S. airlines to Russian airspace for transit and overflights, and potential cooperation with Russia on producing and supplying titanium.

Boeing (BA) previously was part of a Russian titanium joint venture but suspended the arrangement after the Ukraine invasion and has since diversified its supply chains for the metal, according to FT.

Although Putin has not shown any indication he will moderate his hardline negotiating position, the U.S. reportedly hopes the incentives could help bring progress towards a potential deal at three-party talks with Ukraine in Abu Dhabi next month, the first since February.

Crude oil futures fell Tuesday, with U.S. WTI slipping back below $100/bbl, against a backdrop of renewed diplomacy in the Middle East, as Iran, Saudi Arabia, Pakistan, and Turkey agreed to continue talks on regional peace and security after senior officials met in Tehran a day ago.

Oman's foreign minister said discussions with Iran had produced an outline for a temporary arrangement to restore free navigation through the Strait of Hormuz, but a deal would require compromises by both the U.S. and Iran.

"Crude futures are correcting further on news that more negotiations with both Iran and Russia-Ukraine look to be materializing," Dennis Kissler of BOK Financial said in a note.

"While the prospect of peace in both areas is keeping some downside pressure on prices near term, the facts remain of tight global supplies and the increasing U.S. military presence in the Persian Gulf," Kissler wrote.

Front-month Nymex crude (CL1:COM) for December delivery fell 1.8% to $99.90/bbl, and front-month Brent December crude (CO1:COM) slid 1.7% to $113.88/bbl.

Shares of the three top U.S. refining companies—Valero Energy (VLO), Marathon Petroleum (MPC), and Phillips 66 (PSX)—all fell more than 7% in Tuesday's trading.

U.S. natural gas futures (NG1:COM) gained with some help from slightly cooler weather forecasts, although the two-week outlook remains for above-normal temperatures; the front-month Nymex November contract finished up 3.6% to $2.6970/MMBtu.

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