Oil Prices Decline Amid Ongoing Peace Talks and U.S. Rate Speculations
Oil prices dropped on Tuesday, influenced by persistent negative market pressures from Monday, as traders closely monitor the latest developments in Ukraine's peace efforts and await the upcoming U.S. Federal Reserve's interest rate decision.
Brent crude futures saw a slight decrease of 0.2%, settling at $62.34 per barrel. West Texas Intermediate (WTI) fell by 0.3% to $58.70 per barrel. This decline follows significant losses on Monday, when prices surged past the $60 mark after Iraq announced the resumption of production at the vast West Qurna 2 field operated by Lukoil.
Priyanka Sachdeva, senior market analyst at Phillip Nova, commented on the market trends: "The decline in Brent prices towards $62 aligns with the broader outlook for December." She added, "Rumors of potential disruptions in Iraq have quickly subsided, and the market is returning to its main drivers, which are oversupply and cautious demand forecasts," according to Reuters.
On the geopolitical front, Ukraine is preparing to present an updated version of its peace plan to the U.S., following a series of discussions that President Volodymyr Zelensky held in London with leaders from France, Germany, and the UK. Tim Waterer, senior market analyst at KCM Trade, emphasized that "oil will remain within a narrow trading range until there is clarity regarding the peace talks." He explained that "if the negotiations fail, oil prices could rise, while progress may lead to a decrease in prices due to the potential resumption of Russian supplies to the global energy market."
At the same time, informed sources reported that the G7 and the European Union are exploring new options to increase pressure on Russian oil revenues, including discussions about replacing the current price cap mechanism for Russian oil exports with a comprehensive ban on related maritime services.
In Washington, global markets are awaiting the Federal Reserve's monetary policy decision on Wednesday, with market estimates indicating an 87% probability of a 25 basis point rate cut, which is viewed as a critical factor for investment directions and global energy demand forecasts.
