Crude prices edged higher on Monday as traders weighed the possibility of disruptions to Russian oil supply due to renewed U.S. sanctions threats and continued Ukrainian drone attacks on Russian energy facilities.
Brent crude futures gained 40 cents, or 0.6%, to trade at $68.13 by 1200 GMT, while U.S. West Texas Intermediate (WTI) futures climbed 44 cents, or 0.7%, to $64.10.
“The market is somewhat concerned that these peace negotiations are going nowhere,” said Ole Hansen, Head of Commodity Strategy at Saxo Bank. He noted that while the outlook points to supply exceeding demand in the coming months, “in the short term that’s being challenged by a potential geopolitical disruption.”
The tension escalated after U.S. President Donald Trump reiterated his warning on Friday that Russia could face sanctions if progress toward a Ukraine peace deal is not achieved within two weeks. Trump also hinted at imposing steep tariffs on India over its Russian oil imports.
Adding to the uncertainty, U.S. Vice President JD Vance stated over the weekend that Moscow had made “significant concessions” toward a negotiated end to the three-and-a-half-year war.
Meanwhile, Ukrainian forces have stepped up attacks on Russian energy infrastructure. A drone strike on Sunday ignited a massive fire at the Ust-Luga fuel export terminal, Russian officials reported. Another blaze at the Novoshakhtinsk refinery—also blamed on Ukrainian drones—was still burning on Sunday, four days after the initial strike. The facility primarily serves export markets and processes about 5 million metric tons of crude annually, roughly 100,000 barrels per day.
However, fears of a prolonged supply crunch were tempered by OPEC+ decisions to roll back earlier production cuts, adding millions of barrels to the global market. “Eight members of the oil exporters’ group are scheduled to meet on Sept. 7, when they are set to approve another boost,” Hansen added.
Investor sentiment improved slightly after Federal Reserve Chair Jerome Powell signalled the possibility of an interest rate cut at the U.S. central bank’s September meeting. Still, some analysts believe oil prices could remain under pressure.
“Both benchmark oil prices appear to lack momentum,” said Priyanka Sachdeva, senior market analyst at Phillip Nova, noting that markets are increasingly convinced that Trump’s proposed tariffs could dampen global growth.
