Crude prices ticked lower on Tuesday, adding to the sharp 2% decline seen at the start of the week, as markets weighed renewed peace discussions over Russia’s war in Ukraine, concerns about abundant supply, and the approaching U.S. interest rate decision.
By 0717 GMT, Brent crude futures dipped 7 cents, or 0.1%, to $62.42 a barrel, while U.S. West Texas Intermediate slipped 13 cents, or 0.2%, to $58.75.
Both benchmarks dropped more than $1 on Monday after Iraq reinstated production at Lukoil’s West Qurna 2 field, one of the largest oilfields in the world.
Ukraine plans to present a revised peace proposal to the U.S. following discussions in London between President Volodymyr Zelenskiy and leaders from France, Germany, and the U.K.
KCM Trade chief market analyst Tim Waterer said, “Oil is keeping to a tight trading range until we get a better idea of which way the peace talks will go.”
He added, “If the talks break down, we expect oil to move higher, or if progress is made, and there is a likelihood of Russian supply to the global energy market resuming, prices would be expected to drop.”
Meanwhile, sources familiar with the matter said G7 nations and the European Union are considering replacing their current Russian oil price cap with a complete ban on maritime services to further restrict Russia’s oil revenues.
Some market watchers are also awaiting the next update from the International Energy Agency for signs of shifting supply trends.
OANDA senior market analyst Kelvin Wong said, “The next (market) driver is likely to be the IEA monthly oil market report for December, released on 11 December, which it has predicted a record surplus in the oil market in 2026, highlighted in previous outlook reports.”
He added that if the IEA reiterates the risk of significant oversupply, WTI could slide toward the $56.80–$57.50 support area.
Another key focal point is Wednesday’s Federal Reserve policy decision, with futures pricing in an 87% chance of a 25-basis-point rate cut.
Lower rates typically support oil demand by reducing borrowing costs, though analysts note that immediate effects may be limited.
Phillip Nova senior market analyst Priyanka Sachdeva said, “Although markets are largely invested in upcoming FED policy decision on Wednesday for a possible 25bp cut, something that could lend short-term support at the lower end of the $60–65 band, the broader price structure remains anchored by expectations of an oversupplied 2026 (oil market).”