Oil prices moved higher in Asian trade on Tuesday, extending recent gains as attacks on Russian energy infrastructure by Ukraine fueled worries over potential disruptions to global supply.
The escalation follows a major Russian offensive in southeastern Ukraine, including the strategic city of Zaporizhzhia, after several weeks of Ukrainian strikes targeting Russian oil facilities. These developments have heightened uncertainty in energy markets.
The U.S. dollar’s recent weakness also provided support to oil, as investors priced in expectations that the Federal Reserve could lower interest rates during its upcoming policy meeting. As of 21:54 ET (01:54 GMT), Brent crude for November delivery was up 0.3% at $67.63 per barrel, while West Texas Intermediate gained 0.3% to $63.21 per barrel.
Supply Concerns Amid Ample Global Production
Ukraine has stepped up its attacks on Russian oil infrastructure in recent weeks, particularly after U.S.-mediated peace talks failed to yield meaningful progress. Kyiv’s strategy aims to limit Moscow’s ability to fund its military operations through energy revenues.
At the same time, U.S. President Donald Trump has called for expanded sanctions targeting Russia’s oil sector, including penalties on major buyers such as India and China. India previously faced 50% trade tariffs in August. Trump also urged NATO, the EU, and G7 countries to cut Russian oil purchases and increase trade pressure on these nations.
Despite these geopolitical concerns, global oil supply is expected to remain ample. Rising OPEC output and strong production from non-OPEC nations are projected to boost worldwide oil inventories in the coming months. Meanwhile, demand recovery remains modest, particularly in China, and U.S. fuel consumption is expected to soften during the winter season. Bernstein analysts have warned that Brent could drop to $60 per barrel if supply continues to exceed demand, with a global surplus estimated at 1.9 million barrels per day this quarter. Stricter sanctions on Russia are seen as the main factor capable of pushing prices higher.
Dollar Dynamics and Fed Rate Outlook
A softer dollar in recent weeks has helped support oil prices. The greenback has weakened amid growing market expectations that the Federal Reserve will cut interest rates by at least 25 basis points at its upcoming meeting, reflecting a modest easing in labor market conditions.
While uncertainty remains over the Fed’s long-term rate path due to persistent inflation, lower borrowing costs could stimulate economic activity and potentially increase oil consumption.
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