Oil prices rose on Tuesday due to uncertainties surrounding the US Federal Reserve’s (Fed) upcoming interest rate decision, expected to be announced on Wednesday, and the EU ‘s decision to extend its sanctions on Russia.
The international benchmark Brent crude increased by 0.5%, trading at $76.52 per barrel at 12.23 a.m. local time (0923GMT), up from $76.11 at the close of the previous session.
The US benchmark West Texas Intermediate (WTI) rose by 0.5%, reaching $73.21 per barrel, compared to its prior session close of $72.84.
Market expectations suggest that the Fed will leave interest rates unchanged at its first monetary policy meeting of the year, with a 59% probability of an interest rate cut in May. Fed interest rate cuts support upward price movements as a rate cut would likely weaken the US dollar against other currencies, positively impacting oil demand.
Meanwhile, the US Senate approved the nomination of Scott Bessent as Treasury Secretary on Monday. His appointment was seen positively by markets, as it is expected to support economic growth in the US, the world’s largest economy.
These developments have put upward pressure on oil prices by strengthening the outlook for economic recovery in the US, the world’s largest oil-consuming country, and supported upward price movements.
In addition, the EU agreed on Monday to extend its existing sanctions on Russia, which further fueled concerns about supply disruptions and contributed to price increases.
‘EU Foreign Ministers just agreed to extend again the sanctions on Russia,’ the bloc’s foreign policy chief Kaja Kallas said on X. ‘This will continue to deprive Moscow of revenues to finance its war (on Kyiv).’
“Russia needs to pay for the damage they are causing,” she added.
The 27-member bloc renews sanctions every six months and requires unanimity to do so. Last month, the EU adopted its 15th package of sanctions against Russia since the war in Ukraine began in February 2022.
The sanctions target a wide range of sectors, including trade, finance, energy, industry, technology, transportation, dual-use goods, luxury goods, and precious metals like gold and diamonds. Notably, bans on crude oil and certain petroleum products transported by sea, as well as the exclusion of some Russian banks from the SWIFT international payment system, are key measures.
These actions have contributed to rising oil prices by increasing concerns about potential disruptions in global oil supply.
By Duygu Alhan
