Crude prices held close to their strongest levels in two weeks on Monday, supported by growing expectations that the U.S. Federal Reserve will cut interest rates this week—an outcome that traders believe could bolster economic activity and, in turn, energy demand. At the same time, markets continued to track geopolitical developments that could disrupt supplies from Russia and Venezuela.
By 07:22 GMT, Brent crude had inched up 14 cents, or 0.22%, to $63.89 per barrel, while U.S. West Texas Intermediate climbed 15 cents, or 0.25%, to $60.23. Both benchmarks ended Friday at their highest closes since November 18.
LSEG data shows that markets are currently pricing in an 84% probability of a quarter-point cut when the Fed concludes its meeting on Tuesday and Wednesday. Still, comments from Federal Reserve officials suggest the gathering could be one of the most contentious in years, heightening attention on how unified—or divided—policymakers appear on the outlook for inflation and growth.
In Europe, diplomatic efforts to secure a peace deal in Ukraine have made little headway. Key disagreements persist over Kyiv’s security guarantees and the status of territories occupied by Russia. Meanwhile, Washington and Moscow reportedly remain far apart on the peace framework advanced by the administration of U.S. President Donald Trump.
ANZ analysts noted the broad range of possible outcomes, writing: “The various potential outcomes from Trump’s latest push to end the war could release a swing in oil supply of more than 2 million barrels per day.”
Vivek Dhar, analyst at Commonwealth Bank of Australia, highlighted the contrasting risks influencing crude prices. He said a ceasefire represents the most meaningful downside risk, while further damage to Russia’s energy network would push prices the other direction.
Dhar added: “We think oversupply concerns will eventually be realised, especially as Russian oil and refined product flows eventually circumvent existing sanctions, prompting futures to gradually track towards $60/bbl through 2026.”
At the same time, Reuters reported that the Group of Seven nations and the European Union are discussing replacing the existing Russian oil price cap with a full ban on maritime services—an action that would likely impose additional pressure on supply from one of the world’s largest producers.
The United States has also increased scrutiny of Venezuela, including carrying out strikes on vessels it accused of smuggling illicit drugs from the OPEC member and raising the prospect of military intervention aimed at removing President Nicolás Maduro.
Meanwhile, Chinese independent refiners have accelerated their purchases of sanctioned Iranian crude, drawing barrels from onshore storage with the help of newly granted import quotas, according to analysts and industry sources. This activity has helped ease an oversupply in the market.