Oil prices showed slight gains on Monday as geopolitical tensions and economic factors influenced market dynamics. Brent crude oil rose modestly to $67.86 per barrel, up 0.20 percent from the previous day, while West Texas Intermediate (WTI) crude oil increased by 0.26 percent to $63.82 per barrel.
Despite these daily gains, oil prices remain down compared to longer-term periods, with Brent falling about 2.1 percent over the past month and 16.7 percent compared to the same time last year, and WTI experiencing a 4.33 percent decline month-to-month and a 17.56 percent drop year-over-year.
The market is balancing concerns around supply disruptions, primarily linked to the ongoing conflict involving Russia and Ukraine, and hopes for positive economic developments including potential U.S. interest rate cuts.Â
Market sentiment and price volatility
The recent drone attacks by Ukraine on Russian energy infrastructure have heightened fears of oil supply disruptions. Over the past weekend, attacks targeted significant Russian facilities, including a major nuclear power plant and important fuel and oil installations such as the Ust-Luga terminal and Novoshakhtinsk refinery, which is a key site for exports. Fires sparked by these attacks have impaired refining operations, raising concerns about reduced Russian crude exports. The Novoshakhtinsk refinery, with an annual production capacity of around 5 million metric tons (roughly 100,000 barrels per day), continued to burn for several days after the attack. This situation contributed to upward pressure on oil prices on Monday as traders factored in the elevated supply risks.Â
U.S. President Donald Trump reiterated threats of sanctions if progress on a Ukraine peace deal is not made within two weeks. Additionally, he warned of increasing tariffs on Indian imports to 50 percent in response to India’s continued purchases of Russian crude. These developments add layers of uncertainty and risk to the global oil supply landscape, influencing market sentiment towards caution and potential price volatility.
Economic expectations also played a crucial role in shaping oil prices on Monday. Federal Reserve Chair Jerome Powell suggested that the U.S. might resume interest rate cuts as soon as next month. This intention to potentially ease monetary policy boosted market optimism about global economic growth and fuel demand. A weaker U.S. dollar, which generally makes dollar-priced oil cheaper for holders of other currencies, further supported price gains.
Read more: Crude oil prices rise to $67.09 as large U.S. inventory drop signals strong demand
Cautious optimism
The broader market context shows that while prices have climbed slightly in recent sessions, the overall trend since earlier this year shows some downward pressure. This is partly due to higher inventories in some regions and the prospect of increased OPEC+ output, which could offset some of the supply disruptions caused by geopolitical tensions. Refinery intake has increased, helping to absorb elevated supply, but rising inventories hint at a potential oversupply scenario in the near term. Additionally, global crude demand patterns are shifting, with traditional seasonal peaks adjusting due to changing climate and consumption trends, such as demand now favoring summer rather than winter in some key markets.
Looking ahead, oil market participants remain watchful of the continuing geopolitical developments, policy shifts like U.S. tariffs and sanctions, and central banks’ monetary policies. Analysts forecast Brent crude oil to potentially trade around $68.56 per barrel by the end of the current quarter and may reach $70.84 within the next 12 months, signaling cautious optimism about prices stabilizing or gradually recovering if supply risks persist and demand strengthens.
