• Oil futures fell sharply following reports Ukraine has agreed in principle to a U.S.-brokered peace deal with Russia
  • The proposed framework would require Ukraine to cede control of Donetsk, Luhansk, and Crimea while dropping NATO membership pursuit
  • Russia has yet to formally assent to the agreement, though negotiations have advanced further than in previous diplomatic efforts

Oil futures extended their decline in afternoon trading Thursday after CBS reported that Ukraine's government has agreed to a U.S.-brokered peace deal with Russia, according to a senior U.S. official familiar with the negotiations. The development marks the most substantial diplomatic progress in efforts to end Russia's nearly four-year assault on Ukraine.

The reported agreement follows intensive negotiations in Geneva and Abu Dhabi and centers on a 28-point proposal from the Trump administration. While minor details remain unresolved and Russia has not yet given formal assent, the framework represents a breakthrough that could potentially de-escalate geopolitical tensions that have roiled energy markets since the 2022 invasion.

According to people briefed on the discussions, the draft peace deal would require Ukraine to cede control of the Donetsk region—including areas not currently occupied by Russian forces—as well as Crimea and Luhansk. In exchange, Ukraine would receive conditional U.S. security guarantees promising a decisive military response if Russia were to invade again, alongside significant financial support for reconstruction efforts.

Brent crude futures fell as much as 3.2% following the report, trading at $78.45 per barrel, while West Texas Intermediate dropped to $74.12. The decline accelerated throughout the afternoon session as traders priced in reduced geopolitical risk premiums. "The market is reacting to the potential for stabilized energy flows from the region," said one energy trader at a major commodities firm who asked not to be named while discussing market moves. "A ceasefire would remove the constant threat of supply disruptions that have kept a floor under prices."

The economic provisions within the proposed agreement include unfreezing approximately $100 billion in Russian assets to fund Ukraine's reconstruction, with additional financial commitments expected from European partners. The plan also establishes a "Peace Council" to be chaired by President Trump for monitoring compliance, while barring foreign troops—including European forces—from being stationed in Ukraine.

Ukrainian officials have not publicly commented on the reported agreement, and efforts to reach representatives from Ukraine's negotiating team were unsuccessful Thursday afternoon. The framework has sparked concern among some NATO allies and Ukrainian officials who view the territorial concessions as substantial. A joint statement from several NATO members and the U.S., while not rejecting the plan outright, noted that "further work is required for a final agreement."

The Kremlin has previously rejected elements of competing European peace proposals and is understood to favor terms that secure Russia's grip on Donetsk, which it expects to gain either through diplomacy or ongoing combat operations. Russian officials have not commented on the latest developments.

Correction: An earlier version of this article misstated the timing of Russia's full-scale invasion of Ukraine. It began in 2022, not 2020.