Oil prices fell to their lowest levels in two months as a surprise rise in US fuel inventories signalled weaker demand, while ongoing peace talks between Russia and Ukraine added further pressure on the market.

Brent crude settled 49 cents lower at US$72.53 per barrel, while US West Texas Intermediate (WTI) declined 31 cents to US$68.62. Both benchmarks closed at their lowest since 10 December.

Data from the US Energy Information Administration (EIA) showed unexpected increases in gasoline and distillate stockpiles, even as crude oil inventories fell. Analysts noted that the market reacted sharply to the fuel build, reinforcing concerns about slowing demand.

The potential for a peace agreement between Russia and Ukraine also weighed on prices, with ING strategists suggesting that lifting sanctions on Russia could ease supply constraints.

Meanwhile, US President Donald Trump's latest policies—including increased oil exports from Iraq and the reversal of concessions on Venezuelan crude—have introduced further uncertainties in the market.

Despite fresh US sanctions on Iran, concerns over a potential trade war have tempered fears of tighter oil supplies.

Reuters