By: Economy Middle east

Oil prices edged lower on Tuesday as markets weighed ongoing Ukraine-Russia peace negotiations and the looming U.S. Federal Reserve interest rate decision. Brent crude traded around $62.36-$62.42 per barrel, down about 0.21 percent from the prior session, while West Texas Intermediate (WTI) hovered near $59-$60 per barrel following a recent 2 percent tumble. This modest decline reflects trader caution over potential supply increases from Russia and monetary policy signals that could impact global demand.

Brent crude settled with a slight drop to $62.34 per barrel, ranging between $62.33 and $62.55 during the session, marking a 0.24 percent decrease from Monday’s close of $62.49. WTI held steady near $59 after a sharp 2 percent fall the previous day, with recent readings showing it at $60.22 on December 8 before edging to around $58.68 in some exchanges. Over the past month, Brent has fallen 2.56 percent and remains 13.54 percent below year-ago levels, while crude benchmarks broadly sit 11-12 percent lower annually amid persistent supply gluts. 

Prices have fluctuated recently, with Brent peaking near $63.39 earlier in the week and dipping to lows around $61.57 in late November. The current levels follow a brief uptick on December 1, when Brent hit $63.32 and WTI $59.45, but momentum shifted as geopolitical headlines dominated. Traders now eye weekly reports from the Energy Information Administration (EIA), International Energy Agency (IEA), and OPEC for fresh supply-demand insights.

Ukraine talks in focus

Progress in Ukraine peace discussions pressured prices downward, with analysts warning that any deal could unleash more Russian oil exports onto global markets. Sources indicate Group of Seven nations and the European Union are negotiating to replace Russia’s oil price cap with a full ban on maritime services, aiming to curb Moscow’s revenues further.

These talks, still underway, coincide with broader de-escalation hopes that have steadied but not boosted sentiment. Markets had rallied briefly to November highs last Friday, but Monday’s 2 percent drop underscored fears of oversupply if sanctions ease. Russian exports, already resilient, could surge without curbs, weighing on prices already strained by ample non-OPEC production.

U.S. Federal Reserve looms large

The Fed’s two-day meeting, concluding Wednesday, captivates oil traders with an 84-87 percent probability of a 25-basis-point rate cut priced in. LSEG data highlights divided Fed officials, potentially signaling hawkish tones that dampen economic growth and fuel demand. A dovish outcome might lift prices by boosting consumption prospects, but internal rifts could introduce volatility.

This decision arrives amid softening U.S. demand signals, with EIA’s Short-Term Energy Outlook due Tuesday offering key inventory and outlook clues. Markets brace for any hint on future cuts, as persistent high rates have curbed industrial activity and travel, indirectly hitting crude.