Geopolitical threats and the anticipated US rate decrease keep oil near two-week highs
Prices for oil were near their highest level in two weeks on Monday. Investors are expecting the Federal Reserve to lower interest rates this week, which will boost economic growth and energy demand. At the same time, they are keeping an eye on geopolitical risks that could threaten oil sources from Russia and Venezuela.
While U.S. West Texas Intermediate crude was up 7 cents, or 0.12%, to $60.15 a barrel at 0008 GMT, Brent crude prices went up 4 cents, or 0.06%, to $63.79 a barrel.
The prices of both contracts ended the day on Friday at their best levels since November 18.
According to LSEG data, there is an 84% chance that the Fed will cut rates by a quarter point at its meeting on Tuesday and Wednesday. However, this meeting is expected to be one of the most heated in years, and investors are paying close attention to the U.S. central bank’s policy direction and how its members interact with each other.
In Europe, peace talks between Russia and Ukraine are still moving slowly because there are still disagreements about how to protect Kyiv and what should happen to the land that Russia occupies.
ANZ analysts wrote in a note that the result of the current talks could have a big effect on the oil market.
“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.”
Sources close to the situation told Reuters that the Group of Seven countries and the European Union are talking about replacing a price cap on Russian oil exports with a full maritime services ban. This could cut off supplies from the world’s second-largest oil supplier.
The United States has also put more pressure on Venezuela, an OPEC member, by attacking what it says are drug-smuggling boats and threatening to use military action to remove President Nicolas Maduro’s government.
Chinese independent refiners have bought more oil from onshore storage tanks that is from Iran that has been sanctioned using newly issued import quotas, according to trade sources and experts. This has helped ease a supply glut.
