Oil prices rise ahead of Russia-US meeting

Oil prices inched higher on Monday and WTI price rose from $70.6 per barrel to $71.4 per barrel. If oil prices retreat, they may encounter support near $70.0 per barrel, while resistance may be found near $74.1 per barrel.

Reports that US President Donald Trump and Russian President Vladimir Putin agreed to initiate negotiations aimed at ending the war in Ukraine, eased geopolitical tensions last week. US President Donald Trump and Russian President Vladimir Putin are due to meet in Riyadh, Saudi Arabia on Tuesday. Hopes that the crisis between Russia and Ukraine might finally end, eased oil supply concerns, putting pressure on oil prices.

Oil prices are under pressure by concerns over Trump’s energy agenda. Trump has vowed to declare a national energy emergency and start drilling for oil immediately to build up US strategic reserves. 

US President Donald Trump has been using threats of imposing trade tariffs as a negotiation tool to further his agenda with other countries. Trump has threatened that he will announce reciprocal tariffs on many countries, which would raise US import taxes to match those imposed by the country’s other trading partners. If Trump goes through with these heavy tariffs, global inflation is likely to rise and the economic outlook will worsen, putting pressure on oil prices. 

Oil prices are kept in check by high central banks’ interest rates. The US Federal Reserve held interest rates steady at its January meeting after delivering three consecutive rate cuts in 2024. FOMC policymakers voted unanimously to maintain the federal funds range to a target range of 4.25% to 4.50%. Fed Chair Jerome Powell delivered a mildly hawkish message after the policy meeting, putting pressure on oil prices. Powell stated that the Fed’s approach will remain data-driven and stressed that the central bank needs to consider potential policy changes under Trump’s administration. 

Supply concerns are providing support for oil prices, however. US President Donald Trump has imposed new sanctions on Iranian oil exports. The Iranian government has urged OPEC members to take united action against the US sanctions, while the US President is pressuring Saudi Arabia to increase its oil output to make up for the deficit that will be created by the sanctions. 

OPEC+ has announced that it will extend its voluntary production cuts until the end of the first quarter of 2025, however. Oil prices have been under pressure and the cartel is limiting production in an attempt to raise oil prices.

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Written by:
Myrsini Giannouli

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