Oil prices supported by the Russian crisis

Oil prices remained steady on Monday, with WTI price trading close to the $69 per barrel level. If the WTI price declines, it may encounter support near $67.1 per barrel, while resistance may be found near $72.5 per barrel.

Political instability in Russia provided support for oil prices on Monday. Geopolitical tensions held oil prices up on Monday, as the crisis in Russia raised oil supply concerns. The market reaction, however, was somewhat muted, as the crisis has not escalated yet. 

The U.S. Federal Reserve kept its interest rate steady at its June policy meeting for the first time in over a year. Fed officials have voted to keep the central bank’s interest rate at a target range of 5.00% to 5.25%. The Fed has signaled, however, that its tightening cycle is not over yet and that its peak rate might be higher than anticipated. Expectations of additional monetary tightening reduce oil demand expectations, putting pressure on oil prices. 

Global economic concerns have been weighing oil prices down, raising concerns about further oil production cuts. OPEC+ members have opted to keep production cuts unchanged for the remainder of 2023. Saudi Arabia, on the other hand, will cut production by an additional one million barrels per day, starting in July for a month that can be extended. This will reduce Saudi Arabian production to 9 million barrels per day. 

OPEC output cuts, however, have been offset by a deterioration in China’s economic outlook. Uncertainty over China’s economic recovery has put a cap on oil prices. China is the world’s largest importer and the weaker Chinese oil demand outlook has put pressure on oil prices.

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Written by:
Myrsini Giannouli

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