Oil prices slipped again on Tuesday as traders weighed slow-moving peace efforts between Russia and Ukraine, concerns about growing supply, and the Federal Reserve’s upcoming rate decision. Brent settled at $61.94, down $0.55, while WTI closed at $58.25, down $0.63. The declines followed Monday’s sharp drop after Iraq restored output at the West Qurna-2 field, removing a disruption that briefly supported prices.
Markets remained focused on diplomatic developments after President Volodymyr Zelenskiy met European leaders in London, with Ukraine preparing to send a revised peace proposal to Washington. Any agreement that lifts restrictions on Russian exports would release additional barrels into a market already facing signs of oversupply. However, analysts noted that many traders remain skeptical that Moscow is serious about making concessions.
Russia’s latest strikes on Ukraine’s power grid, leaving roughly half of Kyiv without electricity on Tuesday, underscored how fragile negotiations remain. At the same time, Western nations continued discussions over replacing the current price-cap system on Russian crude with a full maritime services ban—an approach that could tighten enforcement but also increase rerouted flows at sea.
Oil-on-water volumes have climbed sharply since mid-August, adding more than 2.5 million barrels per day to floating storage and contributing to downward pressure on prices. Some analysts argued that U.S. sanctions on Rosneft and Lukoil are the main factor preventing an even steeper decline.
Attention now turns to upcoming data and policy decisions. The International Energy Agency’s December report, due December 11, is expected to reinforce projections of a sizeable surplus in 2026. U.S. inventory numbers from the API arrive later Tuesday, with government figures following on Wednesday. Early estimates suggest crude stocks likely declined last week while gasoline and distillate supplies increased.
Markets are also preparing for the Federal Reserve’s decision on Wednesday, with a quarter-point rate cut widely expected. Lower borrowing costs would support economic growth and oil demand, though analysts cautioned that the impact may be muted in the short term, given overriding concerns about supply.