Oil Prices Decline Amid Peace Talks and U.S. Interest Rate Expectations
Oil prices decreased during trading on Tuesday, influenced by ongoing negative pressures that had dominated the market on Monday. Traders were focused on the developments in peace efforts in Ukraine and were cautiously awaiting the U.S. Federal Reserve's imminent decision on interest rates.
Brent crude futures saw a slight decline of 0.2%, settling at $62.34 per barrel. Meanwhile, West Texas Intermediate (WTI) crude dropped by 0.3%, reaching $58.70 per barrel. This decline follows significant losses recorded on Monday, where prices fell by over a dollar after Iraq announced a resumption of production at the West Qurna 2 oil field, operated by Lukoil.
Commenting on the market trend, Priyanka Sachdeva, a senior analyst at Philipp Nova, stated, "The drop in Brent prices to around $62 aligns well with the broader scenario for December." She added, "The noise surrounding potential unrest in Iraq has quickly faded, bringing the market back to its main drivers: supply abundance and cautious demand forecasts," as reported by Reuters.
On the geopolitical front, Ukraine is preparing to submit an updated version of its peace plan to the United States, following a series of consultations led by President Volodymyr Zelensky in London with leaders from France, Germany, and the United Kingdom. Tim Wotherer, a senior analyst at KCM Trade, confirmed that "oil prices are likely to remain in a narrow trading range until the situation regarding the peace process is clarified." He noted that "if negotiations fail, oil prices could rise, but if progress is made and the opportunity for the resumption of Russian supplies in the global energy market arises, prices are expected to decline."
Additionally, informed sources indicated that the G7 and the European Union are exploring new options to increase pressure on Russia's oil revenues, including discussions about replacing the current price cap mechanism on Russian oil exports with a complete ban on related maritime services.
In Washington, global markets are closely monitoring the upcoming decision from the U.S. Federal Reserve, expected on Wednesday, regarding monetary policy and interest rates. Market estimates indicate an 87% likelihood of a quarter-point reduction in the benchmark interest rate, which is viewed as a key factor influencing investment trends and global energy demand forecasts.
