Yesterday was another historic day as Trump and Putin spoke for hours. What comes next remains uncertain, as the Russians refused to agree to an outright truce, instead settling for a cease-fire related to energy infrastructure.

The challenge for Trump is that Putin has strong momentum on the battlefield, and Trump’s early promises of peace for everyone create a shaky incentive structure—at least from a Ukrainian perspective. Will Trump throw a “hand grenade” into the negotiation process as he’s known to do? It’s less obvious here, given his weaker hand, especially as conflicts in Iran/Yemen and Gaza continue to flare up.

The oil market sold off on the “energy truce” between Putin and Trump, but there’s still room for a geopolitical risk premium from the Middle East, as much of what Trump had planned appears to be unraveling.

It will be hard for markets to sustain momentum from this non-truce truce, as we can already see in early morning trading today. The path to peace is not straightforward, and Russia will demand a high price to deliver what Trump has already pre-promised to the world press.

Chart 1: There is NO risk premium in oil prices related to Geopolitics