Oil prices climbed to two-week highs on Monday as investors anticipate a U.S. Federal Reserve interest rate cut this week, which could stimulate economic growth and increase global energy demand.
Brent crude futures rose 9 cents, or 0.14%, to $63.84 per barrel, while U.S. West Texas Intermediate crude edged up 8 cents, or 0.13%, reaching $60.16 per barrel. Both contracts closed last Friday at their highest since November 18.
Markets are currently pricing in an 84% chance of a quarter-point Fed rate cut during the Tuesday-Wednesday meeting. However, comments from board members indicate potential divisions, making this one of the most closely watched sessions in years.
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Geopolitical risks are also influencing oil prices. Slow progress in Ukraine peace talks and disputes over security guarantees and Russian-occupied territories continue to pressure markets. Analysts warn that potential outcomes could swing supply by over 2 million barrels daily.
Further supply concerns arise from ongoing U.S. and European actions against Russia and Venezuela. Discussions are underway to replace a price cap on Russian oil with a maritime services ban, while pressure on Venezuela intensifies amid smuggling and political threats.
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Meanwhile, Chinese independent refiners are increasing purchases of sanctioned Iranian oil using new import quotas, easing a supply glut. Analysts suggest that oversupply concerns may gradually push prices toward $60 per barrel through 2026.