Oil prices traded flat during Monday's Asian deals, extending last week’s declines, as tentative progress in Russia–Ukraine peace negotiations raised the possibility of sanctions relief and a potential increase in supply.
By 3:30 pm AEDT (4:30 am GMT), Brent crude edged 0.1% higher to US$62.59 a barrel, while West Texas Intermediate was steady at US$58.07.
Both benchmarks lost around 3% last week and touched their lowest levels since 21 October, driven by concerns that a peace agreement could ultimately place more Russian oil back on global markets.
United States President Donald Trump has set a Thursday deadline for Kyiv to accept a Washington-brokered proposal, though European leaders are seeking more favourable terms for Ukraine.
A deal that eases sanctions would be significant: Russia was the world’s second-largest crude producer after the U.S. in 2024, according to the U.S. Energy Information Administration.
ANZ analysts noted in a client report that traders are increasingly contemplating the return of sanctioned supply: "A U.S.-brokered peace plan to end the Ukraine-Russia war was to include known Russian demands for concessions that Kyiv has repeatedly said are unacceptable and have so far hindered any ceasefire.
"Even so, traders are becoming increasingly concerned that a peace deal drafted by the U.S. and Russia aimed at ending the war in Ukraine could see sanctioned oil back on the market. These concerns gained traction late in the week after reports emerged that the U.S. is threatening to stop supporting Kyiv unless it agrees to a pact that appears to favour Moscow.
This is despite U.S. sanctions on two major Russian oil companies announced earlier in November going into effect on Friday. President Trump confirmed that he would not remove sanctions as Russian talks continue.
The prospect of additional supply is coinciding with broader macro uncertainty. Investors remain cautious about the timing of rate cuts, though New York Federal Reserve President John Williams suggested easing could occur “in the near term”, lifting expectations of a possible move next month.
Meanwhile, the U.S. dollar strengthened to a six-month high, with the dollar index heading for its largest weekly gain in six weeks after hitting its highest level since late May.
The stronger greenback makes oil more expensive for holders of other currencies, adding another layer of pressure to crude markets.
