Oil prices fell about 2% on Friday to a one-month low as the U.S. pushed for a Russia-Ukraine peace deal that could boost global oil supplies, while uncertainty over interest rates around the world curbed investors’ risk appetite.Brent futures were down $1.16, or 1.8%, to $62.22 per barrel at 11:18 a.m. EST (1618 GMT), while U.S. West Texas Intermediate (WTI) crude was down $1.21, or 2.1%, to $57.79.
That put both crude benchmarks down over 3% for the week, with Brent on track for its lowest close since October 21 and WTI on track for its lowest close since October 20. Market sentiment turned bearish as Washington pushed for a peace plan between Ukraine and Russia to end the three-year war while sanctions on Russian oil producers Rosneft and Lukoil are set to take effect on Friday. Ukrainian President Volodymyr Zelenskiy appealed to Ukrainians for unity on Friday and vowed he would never betray Ukraine.
Potential impact of a peace deal on Oil exports
A peace deal could allow Russia to export more fuel. Russia was the second-biggest producer of crude oil in the world after the U.S. in 2024, according to U.S. federal energy data.”With the news of talks coming just as U.S. sanctions on Russia’s two largest oil companies are due to take effect today, oil markets saw some relief on risks to Russian oil supply,” said Jim Reid, a managing director at Deutsche Bank.However, a peace deal could be some way off.”
An accord is far from certain,” ANZ analysts said in a note to clients, adding that Kyiv has repeatedly dismissed Russia’s demands as unacceptable.”The market is also becoming sceptical that the latest restrictions on Russian oil companies Rosneft and Lukoil will be effective,” the analysts said. Lukoil has until December 13 to sell its huge international portfolio.Another factor weighing on oil prices was a stronger U.S. dollar.
The U.S. greenback hit a six-month high on Friday versus a basket of other currencies. A stronger U.S. dollar can make dollar-priced oil more expensive for buyers using other currencies. On U.S. interest rates, Dallas Fed President Lorie Logan on Friday called for leaving the policy rate on hold “for a time” while the central bank assesses how much of a brake the current level of borrowing costs is putting on the economy.
What did Susan Collins say?
Boston Fed President Susan Collins said on Friday that monetary policy is in the right place amid a resilient economy, in comments that suggest she remains skeptical of the need to cut rates again at next month’s monetary policy meeting.
New York Fed President John Williams, meanwhile, said the central bank can still cut interest rates “in the near term” without putting its inflation goal at risk. Lower interest rates could boost economic growth and oil demand by lowering borrowing costs for consumers and businesses.
