Oil prices declined on Monday, continuing the downward trend from the previous week, as peace negotiations between Russia and Ukraine approached a resolution and the U.S. dollar gained strength.
Brent crude futures decreased by 14 cents, or 0.22%, settling at $62.42 per barrel at 0148 GMT. Meanwhile, West Texas Intermediate fell by 15 cents, or 0.26%, to $57.91 a barrel.
Both crude benchmarks experienced a decline of approximately 3% last week, reaching their lowest closing prices since October 21, as market participants expressed concerns that a peace agreement between Russia and Ukraine could lead to the lifting of sanctions on Moscow, resulting in an influx of previously restricted supply.
“The sell-off was primarily instigated by President Trump’s vigorous advocacy for a peace agreement between Russia and Ukraine, which the markets perceive as a rapid pathway to releasing significant Russian supply,” noted IG analyst Tony Sycamore in a report.
He further remarked that the advancements towards a peace agreement significantly overshadowed the short-term disruptions caused by U.S. sanctions on Rosneft and Lukoil, which were implemented on Friday. These sanctions have left nearly 48 million barrels of Russian crude stranded at sea.
On Sunday, officials from the U.S. and Ukraine announced progress in their discussions regarding a peace plan that would necessitate the war-affected nation to relinquish territory and retract its intentions to join NATO.
U.S. President Donald Trump has set a deadline for this Thursday, although European leaders are advocating for a more favorable agreement.
A peace agreement could potentially reverse sanctions that have limited Russian oil exports. According to the U.S. Energy Information Administration, Russia was the second-largest crude oil producer globally after the U.S. in 2024.
The prospect of additional oil entering the market, coupled with uncertainty surrounding U.S. interest rate reductions, has also dampened investor enthusiasm.
Nevertheless, the likelihood of a rate cut next month has increased following comments from New York Federal Reserve President John Williams, who indicated a potential cut “in the near term.”
The U.S. dollar was on track for its most significant weekly increase in six weeks, with the dollar index reaching its highest level since late May. A stronger U.S. dollar renders oil more expensive for holders of other currencies.
