Oil prices climbed in Asian trading on Monday, extending modest gains from last week as investors monitored potential disruptions to Russian supply following Ukrainian drone strikes targeting Moscow’s energy infrastructure.
Attention this week is also on the U.S. Federal Reserve, widely expected to cut interest rates amid growing concerns over slowing fuel demand in the country.
By 22:15 ET (02:15 GMT), Brent crude for November delivery rose 0.4% to $67.26 a barrel, while West Texas Intermediate (WTI) futures increased 0.5% to $62.72 a barrel.
Russian Supply Risks Persist
Last week, oil prices gained roughly 1% after Ukraine intensified attacks on Russian energy assets, including the Primorsk export terminal and the Kirishinefteorgsintez refinery. These strikes could temporarily take significant volumes of Russian oil offline, raising the risk of supply disruptions, particularly for major importers such as India and China.
Meanwhile, diplomatic efforts by the U.S. to de-escalate the Russia-Ukraine conflict continue, although Moscow indicated on Friday that ceasefire negotiations with Kyiv had stalled.
The U.S. has also been pursuing higher trade tariffs on China and India among G7 nations, following Washington’s late-August decision to impose a 50% tariff on Indian purchases of Russian oil. Additional Western restrictions could further tighten global supply if the conflict persists.
Focus on Fed Rate Decision
Oil markets received additional support from a softer U.S. dollar, which weakened in anticipation of a Federal Reserve rate cut this week. A series of mixed inflation readings and weaker labor market data have fueled expectations that the Fed may resume its easing cycle from September.
According to CME FedWatch, markets are currently pricing in a 96.4% probability of a 25 basis-point rate cut and a 3.6% chance of a 50 bps reduction. Lower interest rates generally stimulate economic activity, which could boost fuel demand in the coming months.
The weaker dollar also benefits commodities priced in U.S. dollars, contributing to the modest rally across oil and other markets.
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