Oil prices inched higher on Monday to close near a two-week high as investors positioned for a potential U.S. Federal Reserve interest rate cut this week and assessed geopolitical developments affecting global supply.
Brent crude oil, against which Nigerian crude oil is priced, rose 14 cents to $63.89 per barrel, while U.S. West Texas Intermediate (WTI) gained 15 cents to $60.23 per barrel during early trading.
Both benchmarks closed the previous session at their strongest levels since November 18, extending last week’s upward momentum.
Market expectations continue to build ahead of the Federal Reserve’s two-day policy meeting scheduled for Tuesday and Wednesday.
Data from LSEG indicates investors are pricing in an 84% probability of a 25-basis point rate cut, a move that could stimulate economic activity and bolster short-term energy demand.
However, analysts caution that recent comments from Fed board members suggest a sharply divided committee, placing added focus on the bank’s forward-guidance signal.
Beyond monetary-policy dynamics, traders are monitoring geopolitical risks that could significantly reshape global supply flows.
Negotiations aimed at securing a peace framework in Ukraine remain stalled as disagreements persist over security guarantees for Kyiv and the status of Russian-held territories.
U.S. and Russian negotiators also differ on aspects of the latest proposal advanced by the administration of U.S. President Donald Trump.
Analysts at ANZ noted that the outcomes of ongoing diplomatic efforts could swing global oil supply by more than 2 million barrels per day, depending on whether disruptions persist or sanctions ease.
Commonwealth Bank of Australia’s strategist Vivek Dhar highlighted that a ceasefire in Ukraine represents the most significant downside threat to oil prices in the near term, while any sustained damage to Russian production infrastructure remains a key upside risk.
“We expect oversupply pressures to become more visible, particularly as Russian crude and refined products find new routes to bypass existing sanctions,” the note said, projecting that futures may gradually drift toward $60 per barrel through 2026.
At the same time, Group of Seven nations and the European Union are discussing a shift from the current Russian oil price cap to a broader maritime services ban, a measure that could further constrain supply from the world’s second-largest producer.
The United States has also intensified its stance against Venezuela, issuing warnings, carrying out targeted maritime strikes, and signalling the possibility of stepped-up actions against the Maduro administration.
Elsewhere in Asia, Chinese independent refiners have increased purchases of sanctioned Iranian crude, drawing from onshore storage to take advantage of newly issued import quotas.
The move has helped ease excess supply conditions in parts of the Asian market but underscores the complexity of sanctions-driven trade flows.
Oil markets are expected to remain sensitive to monetary policy outcomes, geopolitical developments, and supply-side reshaping in the coming weeks as investors assess the underlying balance for 2026.