Oil Steady After Early Drop With Ukraine, U.S. Outlook in Focus
Oil steadied after an early drop, with talks to end the war in Ukraine and a U.S. credit downgrade in focus.
Brent fell as much as 1.1% to below $65 a barrel before recovering, while West Texas Intermediate traded near $62. U.S. President Donald Trump and Vladimir Putin are due to speak by phone later on Monday, though the Russian leader may believe he has the upper hand in the fight and is therefore unlikely to make concessions.
Late Friday, Moody’s Ratings withdrew the U.S. government’s top credit rating, adding to concerns about the outlook for global growth. The downgrade, which follows other major rating agencies, risks amplifying Wall Street’s growing concerns about the U.S. Treasury bond market and a slowing economy. Meanwhile, Iran will not give up its pursuit of civilian nuclear energy under any circumstances, President Masoud Pezeshkian said in remarks broadcast on state television. His comments came as rhetoric between Iranian and U.S. officials has escalated in recent days.
“The oil market is in limbo, trying to balance what a U.S. credit downgrade, if any, means for oil, along with uncertainty about how the Iran nuclear talks are progressing,” said Warren Patterson, head of commodity strategy for ING Groep NV. Ukraine is also in focus, although “in the event of a de-escalation and easing of sanctions, additional Russian oil supply is likely to be limited, given that Russian oil flows have been well contained.”
Crude prices rebounded over the previous two weeks on growing uncertainty over the progress of U.S.-Iran talks and after an Israeli attack on Houthi-held Yemeni territory that has prompted promises of retaliation. Futures are still down more than 10% this year as Trump’s trade war threatens demand and OPEC+ returns to production cuts in a market that is expected to be oversupplied later this year.
Source: Bloomberg
