WASHINGTON (dpa-AFX) - Crude oil took a tailspin on Monday as the U.S. dollar firmed up.
In addition, traders' focus fixed on the trajectory of the U.S. peace plan aimed to end the Russia-Ukraine war and on the announcements to be made by the U.S. Federal Reserve on December 10.
WTI Crude Oil for January delivery was last seen trading down by $1.28 (or 2.13%) at $58.80 per barrel.
Crude oil being a dollar-denominated commodity, lost value today after the U.S. dollar consolidated. The dollar index was last seen trading at 99.08, up by 0.09%.
Despite the sanctions imposed by the U.S. and the West to force Russia to end its war with Ukraine, Russia is continuing its attacks.
In an overnight strike on Sunday, Russia targeted the central Ukrainian city of Kremenchuk.
For its part, Ukraine's military stated that it had hit the Russian Ryazan oil refinery.
Even as the sanctions are cutting off the petrodollar revenue to Russia, the G7 and European Union are contemplating replacing the current price cap on Russian oil with a full ban on Western maritime services.
At present, other countries can buy Russian oil only at the set maximum price.
Under the new proposal, beyond merely dictating the price, the coalition wants to ban Western ships and services from carrying Russian oil which would force Russia to rely on its own services thereby lose more income.
Traders are optimistic of an end to the conflict as U.S. President Donald Trump has intensified his measures to end the war. In the ongoing diplomatic process pursued by the Trump administration, last Tuesday, the U.S. envoy Steven Witkoff held talks with Russian President Vladimir Putin.
Later, his team conducted several rounds of negotiations with their Ukrainian counterparts in Miami, Florida.
However, the discussions ended on Saturday with no significant breakthrough.
On Sunday, Trump stated that Ukrainian President Volodymyr Zelenskyy has not yet read the U.S. proposal and added that he was a 'little disappointed' with Zelenskyy though Russia welcomed the U.S. efforts.
Today, Zelenskyy held a meeting with European leaders in London to gather support from Ukraine-friendly nations (U.K., France, Germany) before agreeing to the Trump's plan.
Later, Zelenskyy is set to meet NATO officials in Brussels and the European Commission's President Ursula von der Leyen.
Anticipation for an interest rate reduction by the U.S. Federal Reserve dominated trading sentiment in the U.S.
The Fed is conducting a two-day meeting from tomorrow, after which the team would announce the new interest rates.
A lower borrowing cost could intensify U.S. economic growth and accelerate fuel consumption by the world's largest oil consumer.
International Energy Administration's recent reports for supply-vs-demand indicated that supply will override the demand by around 2.4 million barrels per day for this year and double up for the next year.
As tension between the U.S. and Venezuela escalate, U.S. has brought in around ten U.S. vessels in the Carribean in its military build-up against the nation.
Trump accused the Latin American nation of freely allowing illegal drug trade that seeps into the U.S.
Venezuela denied this and counter-alleged that Trump's administration is eyeing for the rich oil reserves in Venezuela under the garb of curbing illegal drug trade.
Venezuela's oil reserves stand at approximately 303 million barrels, even higher than Saudi Arabia's 267 billion.
The trajectory of oil prices would be steered by the Fed's decision on Wednesday in the short-term and a breakthrough in Russia-Ukraine peace process in the longer term.
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