NEW YORK: Oil prices fell about 2 percent on Friday to a one-month low as the US pushed for a Russia-Ukraine peace deal that could boost global oil supplies, while uncertainty over US interest rates curbed investors’ risk appetite.
Brent futures fell USD1.05, or 1.7 percent, to USD62.33 per barrel at 1:36 p.m. EST (2036 GMT), while US West Texas Intermediate (WTI) crude slipped USD1.17, or 2.0 percent, to USD57.83.
That put both crude benchmarks down over 3 percent for the week and on track for their lowest closes since October 21.
Market sentiment turned bearish as Washington pushed for a peace plan between Ukraine and Russia to end the three-year war, while sanctions on Russian oil producers Rosneft and Lukoil are set to take effect on Friday.
Ukrainian President Volodymyr Zelenskiy said on Friday that Ukraine faced losing its dignity and freedom or Washington’s support over the US peace plan, which endorses key Russian demands and which US President Donald Trump said Kyiv should agree to by Thursday.
Russian President Vladimir Putin said on Friday that Moscow had received the US proposals for peace in Ukraine and that the plan could be the basis of a peaceful resolution of the conflict.
A peace deal could allow Russia to export more fuel. Russia was the second-biggest producer of crude oil in the world after the US in 2024, according to US federal energy data.
“With the news of talks coming just as US sanctions on Russia’s two largest oil companies are due to take effect today, oil markets saw some relief on risks to Russian oil supply,” said Jim Reid, a managing director at Deutsche Bank.
However, a peace deal could be some way off.
“An accord is far from certain,” ANZ analysts said in a note to clients, adding that Kyiv has repeatedly dismissed Russia’s demands as unacceptable.
“The market is also becoming sceptical that the latest restrictions on Russian oil companies Rosneft and Lukoil will be effective,” the analysts said.
Lukoil has until December 13 to sell its huge international portfolio.
Another factor weighing on oil prices was a stronger US dollar. The greenback hit a six-month high on Friday versus a basket of other currencies.
A stronger US dollar can make dollar-priced oil more expensive for buyers using other currencies.
On US interest rates, Dallas Fed President Lorie Logan on Friday called for leaving the policy rate on hold “for a time” while the central bank assesses how much of a brake the current level of borrowing costs is putting on the economy.
Boston Fed President Susan Collins said on Friday that monetary policy is in the right place amid a resilient economy, in comments that suggest she remains sceptical of the need to cut rates again at next month’s monetary policy meeting.
New York Fed President John Williams, meanwhile, said the central bank can still cut interest rates “in the near term” without putting its inflation goal at risk.
Lower interest rates could boost economic growth and oil demand by lowering borrowing costs for consumers and businesses.
In other economic news, US factory activity slowed to a four-month low in November as higher prices because of tariffs on imports restrained demand, leading to a piling up of unsold goods that could hinder growth in the overall economy.
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