Crude oil prices posted a solid advance, supported by a more favourable macroeconomic backdrop and a rebound in geopolitical risk premiums.
Expectations that the Federal Reserve will begin a new cycle of rate cuts have strengthened the outlook for higher energy demand in 2025, while the weakness of the U.S. dollar makes crude imports cheaper for international buyers.
Under this scenario, Brent climbed toward $63.62 per barrel, and WTI reached $60.02, levels that reflect renewed appetite for the energy market.
The lack of concrete progress in peace talks between the United States and Russia regarding the conflict in Ukraine also drove the rally. This stalemate reduces the likelihood that large volumes of Russian crude oil will return to the global market anytime soon, keeping supply uncertainty elevated. The persistence of the conflict remains a key factor shaping expectations for a normalization of international energy flows.
Additional pressure comes from recent Ukrainian attacks on Russian oil infrastructure, including the Druzhba pipeline, a major supply artery for Europe.
Although flows continued to operate normally, markets interpreted these attacks as yet another sign of vulnerability in Russia’s critical infrastructure. As a result, supply-side risk premiums have increased, helping sustain crude prices.
Refined-product output in Russia has declined in recent months due to these disruptions. This decline adds pressure to a market that remains highly sensitive to any sign of supply disturbance, especially as global refining capacity faces seasonal constraints. The combination of lower production and persistent risks has reinforced the perception of a tighter market in the short term.
In the United States, crude inventories rose more than expected, raising doubts about the balance between supply and demand in the world’s largest oil consumer. This increase has moderated some of the bullish momentum, suggesting domestic demand may be losing traction while markets await clearer signals on economic activity and monetary policy. Nevertheless, the market’s sensitivity to international developments has remained positive.
Meanwhile, Fitch revised its crude oil-price projections downward for 2025–2027, anticipating an oversupplied market driven by continued production growth in the United States, Brazil, and Guyana. These more conservative forecasts contrast with the recent rally, but they have not been enough to halt short-term bullish dynamics, which remain fuelled by macroeconomic and geopolitical factors.
In Asia, Saudi Arabia cut its official selling prices to customers to the lowest levels in five years, seeking to preserve market share amid intensifying competition. At the same time, Kazakhstan reported a drop in production after a drone attack partially disrupted operations on the CPC pipeline, adding to crude-price volatility during the session.
In conclusion, crude oil continues to find support in expectations of monetary easing in the United States and the intensification of geopolitical risks threatening global supply.
Although factors such as rising U.S. inventories and downward price revisions curb excessive optimism, the combination of a weak dollar, international tensions, and disruptions to energy infrastructure has created a favorable short-term environment for prices.
The market remains highly sensitive, and any developments in monetary policy or the conflict in Ukraine could determine crude’s direction in the coming weeks.
