SULAIMANI (ESTA) — Oil prices fell on Monday, as diplomatic efforts to end the war in Ukraine geared up and markets braced for higher U.S. interest rates.
Brent crude futures dropped by $3.62 to $109.1 a barrel at 0741 GMT.
U.S. West Texas Intermediate (WTI) crude futures fell $4.32 to $105 per barrel.
Both contracts have surged since Russia’s Feb. 24 invasion of Ukraine and are up roughly 40% for the year to date, according to Reuters.
Officials from Ukraine and Russia are set to talk again on Monday via video link after they cited progress.
Reuters reported that negotiators had given their most upbeat assessments after weekend negotiations, suggesting there could be positive results within days.
“Oil prices might continue moderating this week as investors have been digesting the impact of sanctions on Russia, along with parties showing signs of negotiation towards ceasing fire,” Reuters quoted Tina Teng, an analyst at CMC Markets, as saying.
“As markets had priced in for a much tighter supply from February to early March, the focus is shifting to the monetary policy in the upcoming FOMC meeting this week, which could strengthen the USD further, and pressuring on commodity prices,” Teng added.
The U.S. Federal Open Market Committee meets on March 15-16 to decide whether or not to raise interest rates.
The Federal Reserve is expected to start raising rates this week, which would put downward pressure on oil prices. Oil prices typically move inversely to the U.S. dollar, with a stronger greenback making commodities more expensive for foreign currency holders.
