Oil prices stabilized on Tuesday, recovering from a 2% drop in the previous session, as market participants closely monitored the ongoing peace talks in Ukraine and the upcoming U.S. interest rate decision. The focus remains on the potential impact of these developments on global oil markets.
At 0101 GMT, Brent crude futures were trading at $62.47 per barrel, a slight 2-cent increase from the previous day, while U.S. West Texas Intermediate crude was at $58.84 per barrel, down 4 cents. These fluctuations come after Iraq's restoration of production at Lukoil's West Qurna 2 oilfield, one of the world's largest, causing a more than $1 decline in both contracts on Monday.
The peace talks in Ukraine, led by President Volodymyr Zelenskyy, have prompted a revised peace plan to be shared with the U.S. This development has created uncertainty in the oil market, with analysts like Tim Waterer noting that oil prices are currently trading within a tight range.
Waterer predicts that if the peace talks fail, oil prices may rise, but if progress is made and Russian oil exports resume, prices could drop. The Group of Seven countries and the European Union are considering a full maritime services ban on Russian oil exports, aiming to reduce Russia's oil revenue.
Additionally, the Federal Reserve's policy decision on Wednesday is expected to result in a quarter-point rate reduction, with markets pricing in an 87% probability. However, analysts at BMI foresee an oversupply in the energy market, which could keep prices under pressure in 2026, despite potential crude price recovery later in the year due to reduced production and steady consumption growth.
