Oil prices inched higher on Monday, stabilizing after last week’s steep decline. Markets continued to assess the impact of potential progress on a Ukraine peace agreement and what it could mean for global crude supply.
At 07:50 ET (12:50 GMT), January Brent futures rose 0.2% to $62.08 per barrel, while West Texas Intermediate (WTI) crude gained 0.7% to trade at $58.20 per barrel. Both benchmarks had fallen nearly 3% over the previous week.
Ukraine Peace Prospects Weigh on Oil Market
The United States and Ukraine agreed on an “updated and refined” peace framework for the conflict with Russia. The revised proposal includes changes to an earlier 28-point plan that Ukraine and several allies had criticized as being too favorable to Moscow.
If a deal eventually materializes, it could pave the way for increased Russian oil exports through reduced sanctions. This would potentially expand global supply and add downward pressure on prices.
However, analysts at ING noted that significant obstacles remain, including possible territorial concessions, limits on Ukraine’s military, and the need for strong security guarantees. These challenges make a swift agreement unlikely.
New U.S. Sanctions on Russian Oil Firms Take Effect
Markets are also watching the latest U.S. sanctions targeting Russian oil giants Rosneft and Lukoil, which came into force on November 21. These measures block major channels for Russian crude exports and restrict global buyers and financial institutions from dealing with these companies.
While speculation about a peace deal has weighed on prices, the sanctions could provide support by raising the risk of tighter near-term supply. ING analysts said that developments around both sanctions and negotiations remain critical for oil markets, especially given the uncertainty around Russia’s future output.
They added that a peace deal would likely increase the chances of sanctions being eased or enforced less strictly.
Bank of America Sees Brent Averaging $60 in 2026
Looking ahead, Bank of America expects global oil demand to grow by around one million barrels per day in 2026. However, it also forecasts non-OPEC+ supply rising by about 0.8 million barrels per day, while OPEC+ continues to defend market share. This combination could create a surplus of roughly two million barrels per day, leading to average Brent and WTI prices of $60 and $57 per barrel respectively in 2026.
Still, geopolitical risks remain. Venezuela and Iran are producing well below early-2021 levels, and Russia’s supply could also fall short of expectations. With global GDP expected to grow 3.3% in 2026, oil demand should remain resilient.
Bank of America noted three factors that could keep Brent from falling much below $50 per barrel if downside risks emerge. First, OPEC+ has little incentive to let prices collapse due to rising borrowing needs. Second, U.S. shale output is likely to stagnate at $60 Brent and could decline sharply if prices fall by another $10. Third, global storage capacity remains ample, and China is expected to continue building strategic reserves through 2026.
