Crude prices steadied on Monday close to their strongest levels in two weeks, supported by expectations that the U.S. Federal Reserve will lower interest rates this week — a shift that traders believe could stimulate economic activity and fuel additional demand for energy. Geopolitical tensions affecting Russian and Venezuelan output added another layer of support.

By 07:22 GMT, Brent crude edged up 14 cents, or 0.22%, to $63.89 a barrel, while U.S. West Texas Intermediate rose 15 cents, or 0.25%, to $60.23. Both benchmarks finished Friday at their highest settlements since November 18.

LSEG data shows that markets currently assign an 84% probability to a quarter-point reduction in U.S. rates at the Fed’s meeting on Tuesday and Wednesday. Yet comments from policymakers suggest deep divisions within the central bank, prompting investors to closely examine any signals about the direction of future policy.

Progress on Ukraine peace negotiations in Europe remained limited, with major disagreements still unresolved around Kyiv’s long-term security and Russia’s territorial claims. U.S. and Russian officials also remain far apart on the peace proposal promoted by the administration of U.S. President Donald Trump.

Analysts at ANZ highlighted the wide range of possible geopolitical outcomes, writing: “The various potential outcomes from Trump’s latest push to end the war could release a swing in oil supply of more than 2 million barrels per day.”

Commonwealth Bank of Australia analyst Vivek Dhar noted that opposing forces continue to shape the outlook for crude, saying that a ceasefire would be the most significant bearish factor, while further damage to Russia’s energy infrastructure would be strongly supportive of prices.

Dhar added: “We think oversupply concerns will eventually be realised, especially as Russian oil and refined product flows eventually circumvent existing sanctions, prompting futures to gradually track towards $60/bbl through 2026.”

Reuters reported that the G7 and European Union are discussing replacing the current price cap on Russian oil with a full maritime services ban — a measure that would likely restrict supply further by limiting shipping and insurance access for Russia’s crude exports.

The United States has also increased its pressure on Venezuela, another OPEC producer. Recent actions include strikes on vessels it accused of smuggling drugs, as well as renewed talk in Washington of possible military steps aimed at removing President Nicolás Maduro.

Meanwhile, buying activity from Chinese independent refiners has picked up, with traders and analysts indicating that new import quotas have enabled them to draw more heavily on sanctioned Iranian crude held in onshore storage, helping to ease a buildup of excess supply.

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