Oil prices moved lower on Monday, giving back part of last week’s gains as traders monitored both the ongoing Ukraine-Russia negotiations and expectations of a Federal Reserve rate cut later this week.
At 08:15 ET (13:15 GMT), February Brent futures fell 1.2% to $63.02 per barrel, while West Texas Intermediate (WTI) crude dropped 1.2% to $59.37 per barrel. Last week, WTI gained more than 2% and Brent rose around 1%.
Ukraine peace talks remain in focus
The latest mediation efforts, which include U.S. involvement, have so far failed to secure progress between Russia and Ukraine. Talks remain stuck over security guarantees for Kyiv and the unresolved status of territories currently under Russian control.
This diplomatic deadlock continues to add a risk premium to oil markets, as prolonged uncertainty could disrupt Russian crude exports or delay the lifting of sanctions.
However, President Donald Trump’s outgoing Ukraine envoy said over the weekend that a peace deal is “really close,” with only two major issues remaining: the future of the Donbas region and the Zaporizhzhia nuclear power plant.
Commonwealth Bank of Australia analyst Vivek Dhar noted that a ceasefire represents the biggest downside risk for oil prices, while long-term damage to Russia’s oil infrastructure remains a key upside risk. He added that oversupply concerns may grow as Russian oil eventually finds ways around sanctions, potentially pushing futures toward $60 per barrel through 2026.
Meanwhile, Reuters reported that the Group of Seven countries and the European Union are discussing replacing the Russian oil price cap with a full maritime services ban — a move that could significantly restrict Russian supply.
Fed rate cut could support demand outlook
Markets are also focused on the Federal Reserve, which is widely expected to announce a 25-basis-point rate cut on Wednesday. Lower interest rates could stimulate economic activity and boost overall energy demand, although this expectation is already priced in.
A weaker U.S. dollar — often associated with easing — would make crude more affordable for buyers using other currencies, offering additional support for demand.
Despite this, the market remains cautious as OPEC+ continues to maintain steady production levels, keeping supply pressures in view.
