Oil prices stabilize on Ukraine deal hopes after last week’s slump

Global oil prices stabilized on Monday after declining 3% last week on the chances for a rate cut by the US Federal Reserve and the prospect of a Ukraine peace deal, which could lead to the easing of sanctions on Russia, one of the largest oil producers.

Brent crude futures edged up slightly by 13 cents or 0.21% to $62.07 per barrel by evening, while West Texas Intermediate (WTI) was up 0.12 cents or 0.21% to $58.179, according to Investing.com and Trading Economics.

Analysts have said the market is waiting for details on the Ukraine peace deal, which could ease restrictions on Russian oil companies.

The prices will also be impacted by a possible rate cut by the Fed in December, which could impact oil prices.

"Expectations of a potential Fed rate cut in December may also provide a counterbalance to bearish sentiment by improving global risk appetite," said Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm, told Reuters.

The crude market has suffered a volatile year. The benchmark Brent contract has fallen almost 20% so far in 2025, averaging $69 a barrel.

A new report by Bank of America said prices are expected to remain under pressure in 2026.

“The high end of the range was $82 per barrel first on the back of U.S. sanctions on Russia in January and then as the U.S. struck Iran in June. The low end of the range was $60 per barrel in May right before US and China agreed to de-escalate trade measures,” said analysts at Bank of America, in a note dated November 23.

The report estimated that oil demand may grow by one million barrels per day in 2026, but with non-OPEC+ supply set to rise by around 0.8 million barrel per day and OPEC+ poised to continue its fight for market share, a looming surplus of two million barrel per day should result in Brent and WTI prices averaging just $60 and $57 per barrel in 2026, respectively.

As world GDP expands by 3.3% in 2026, oil demand growth should hold up, according to the report.

Geopolitical concerns

Geopolitics remain a risk in judging the supply levels next year, as Venezuela and Iran are major oil producers and any adverse U.S. actions against these nations could disrupt the market. The Russian supply could fall short of expectations.

The report also outlined three factors that may bring Brent prices to around $50 barrels per day .

“First, it is not in OPEC+’s self-interest to drive prices much lower due to rising borrowing requirements. Second, US shale oil production is poised to stagnate at $60 barrels per day Brent and could contract materially if prices drop another $10 barrels per day. Three, there is still ample storage capacity and China should continue to build strategic crude inventories through 2026,” BofA added.

Weaker economic growth and the ongoing OPEC+ price war remain key downside risks to oil next year. Upside risks to energy include geopolitical tensions, although peace in Ukraine could push all fuel prices down, the report said.