Trump-Putin 'Highly Productive' Call Sparks Oil Sell-Off As Investors Eye Geopolitical De-Escalation

A high-stakes call between President Donald Trump and Russian President Vladimir Putin sent shockwaves through markets, dragging down oil prices and U.S. defense stocks as investors reacted to Trump's surprise announcement of imminent peace negotiations to end the war in Ukraine.

The West Texas Intermediate light crude – as tracked by the United States Oil Fund USO – tumbled by 2.7% by 3:10 p.m. ET in New York, heading for its worst session since late November 2024.

Trump posted Wednesday on Truth Social that he had “a lengthy and highly productive” conversation with Putin, with the two leaders discussing “Ukraine, the Middle East, Energy, Artificial Intelligence, the power of the Dollar, and various other subjects.”

Trump added that he had directed his top officials, including Secretary of State Marco Rubio, CIA Director John Ratcliffe, National Security Advisor Michael Waltz and Ambassador and Special Envoy Steve Witkoff to lead negotiations.

Putin reportedly responded positively to the discussions and expressed willingness to cooperate.

This decision follows a high-profile prisoner exchange between Washington and Moscow. On Tuesday, Russia released American teacher Marc Fogel after three years of detention, while the U.S. freed Russian cybercriminal Alexander Vinnik.

What's Next For Ukraine And NATO?

The reaction from Kyiv remains cautious. Ukrainian President Volodymyr Zelenskyy also confirmed he had a "meaningful" conversation with Trump following the talks the U.S. President had with Putin.

“No one wants peace more than Ukraine. Together with the U.S., we are charting our next steps to stop Russian aggression and ensure a lasting, reliable peace,” Zelenskyy stated.

The Ukrainian leader highlighted that Ukraine remains committed to defending its sovereignty.

Zelenskyy also met with Secretary of Security Scott Bessent, marking Bessent's first international visit. The two discussed preparing a new document outlining security, economic cooperation and resource partnerships.

Zelenskyy stressed the importance of preventing Moscow and its allies from gaining control over Ukraine and underscored the need for unified action across the free world.

"We expect to make progress by the Munich Security Conference," Zelenskyy said.

I had a meeting with @SecScottBessent—his first international visit, which was to Ukraine. We value our partnership with the United States, are grateful for the support in defending our independence, and strive to expand our joint capabilities—especially in security.

Security… pic.twitter.com/Px2VQ0Cnv0
— Volodymyr Zelenskyy / Володимир Зеленський (@ZelenskyyUa) February 12, 2025

Stock Market Reactions

Investors viewed the move as a sign of easing geopolitical tensions and a possible decrease in U.S. government spending on defense contractors.

The Energy Select Sector SPDR Fund XLE, representing major U.S. energy companies, tumbled by 2.24% on Wednesday, weighed down by lower oil prices.

Shares of major U.S. defense contractors experienced marginal declines amid expectations of reduced defense spending following the potential de-escalation in Ukraine.

Lockheed Martin Corp. LMT was down by 1.4% to $443.30, Northrop Grumman Corp. NOC eased by 0.5% to $471.70 and General Dynamics Corp. GD dropped by 1.86% to $252.21.

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