Ukrainian President Volodymyr Zelenskyy welcomed the U.S.-brokered "energy ceasefire," but warned on Monday that Moscow must reciprocate. Zelenskyy stated that if Russia does not agree to the ceasefire announced by President Donald Trump on Sunday, Ukraine will respond. "If the Americans need it, we are ready to sign these guarantees to make sure they can be trusted, and it's important that we all see this situation in the same way," he said, claiming that Russia has already violated the ceasefire.
Zelenskyy noted that Russian drone attacks have continued throughout the morning, with more jet-powered Shahed drones entering Ukrainian airspace over Kyiv and other cities. He mentioned that many of these drones were shot down, preventing further damage to energy infrastructure.
This statement follows an attack on a power plant in Kharkiv, Eastern Ukraine, where Russia targeted state-owned energy company Naftogaz's gas production infrastructure. The company reported no injuries but confirmed that critical equipment was damaged in the attack.
Earlier on Sunday, Trump announced the "energy ceasefire" aimed at lowering fuel costs ahead of the U.S. midterm elections, stating on social media, "Effective immediately, there is an ENERGY CEASEFIRE in the War between Russia and Ukraine. Both parties have agreed. Do not break it!"
The Kremlin indicated on Monday that discussions regarding the energy ceasefire are ongoing, but did not provide details on whether any agreement would be limited to oil refineries. Russia's presidential office did not immediately respond to a request for further information from CNBC.
Since Russia's full-scale invasion of Ukraine in 2022, ceasefires have often proven fragile. Trump has previously attempted to broker an end to the conflict, but these efforts have not been successful.
Neil Atkinson, former head of oil at the IEA, expressed skepticism about the ceasefire, stating, "We've been here many times before over the last four and a half years, so I don't think we should build our hopes up too much."
Trump also mentioned a deal with President Vladimir Putin for Russia to supply over 4 million tons of diesel to global markets, with immediate supplies of 300,000 tons and additional amounts in the following months. Atkinson noted that the volumes discussed are relatively small and unlikely to significantly impact the market.
EU's top diplomat Kaja Kallas welcomed the energy ceasefire but cautioned that it is not the time to ease pressure on Russia, stating that suspending sanctions on Russian diesel would provide Moscow with more revenues to continue the war.
EU foreign ministers are scheduled to meet in Luxembourg on Monday to discuss the Russia-Ukraine war and will adopt nearly 1,600 new sanctions targeting Russia's military-industrial complex.
Following Zelenskyy's comments, oil prices turned positive after trading lower earlier in the session. Brent crude futures for December delivery rose 0.69% to $105.44 a barrel, while West Texas Intermediate futures for November increased 0.54% to $92.35 per barrel.