Oil prices climbed by about 1% on Thursday after U.S. President Donald Trump warned of “severe consequences” if his talks with Russian President Vladimir Putin over Ukraine fail. Expectations of a possible U.S. interest rate cut next month also supported the market, as lower rates can boost economic growth and fuel demand for oil.
Brent crude futures rose 87 cents, or 1.3%, to $66.50 a barrel at 10:53 a.m. EDT (1453 GMT), while U.S. West Texas Intermediate (WTI) crude gained 88 cents, or 1.4%, to $63.53. The rally helped both benchmarks move out of technically oversold levels for the first time in three days.
Earlier this week, Brent had closed at its lowest since June 5 and WTI at its lowest since June 2, weighed down by bearish supply and inventory data from the U.S. Energy Information Administration and the International Energy Agency.
On Thursday, Russian President Vladimir Putin praised the United States’ “sincere efforts” to end the war in Ukraine and suggested the possibility of a nuclear arms agreement ahead of his summit with U.S. President Donald Trump in Alaska on Friday. Meanwhile, U.S. allies in Europe have urged Trump to take a firm stance.
Russia, the world’s second-largest crude producer in 2024 after the U.S., could see its oil exports rise if sanctions are eased as part of any deal. However, on Wednesday Trump warned of “severe consequences” if Putin refuses to pursue peace in Ukraine. While he did not detail those consequences, Trump has previously threatened new economic sanctions and even secondary tariffs targeting buyers of Russian crude — mainly China and India — if Moscow continues its military campaign.
“The uncertainty of U.S.-Russia peace talks continues to add a bullish risk premium, as Russian oil buyers could face more economic pressure,” Rystad Energy said in a note to clients. Still, some analysts remain doubtful that Trump will push measures strong enough to cause major disruptions in oil supplies.
Fed Rate Cut
Oil prices also drew support from expectations that the U.S. Federal Reserve will cut interest rates in September. Most traders anticipate a reduction after U.S. consumer prices rose only moderately in July. Treasury Secretary Scott Bessent even suggested an aggressive half-point cut could be possible, citing weak employment data.
However, a sharp rise in U.S. wholesale prices last month has largely ruled out a jumbo half-point cut. Instead, markets are now betting on a quarter-point rate cut in September, with another likely in October. San Francisco Fed President Mary Daly has also opposed the idea of a 50-basis-point cut at the Fed’s September 16–17 meeting, according to the Wall Street Journal.
In Europe, a survey released Thursday showed that Norwegian oil and gas investments are expected to peak this year before declining in 2025 as major projects wrap up. Norway, which produces around 2% of the world’s oil, became Europe’s top pipeline gas supplier after Russia’s invasion of Ukraine in February 2022.
Editor-at-Large
A passionate writer in the lubricant industry, Awais Iqbal has been covering oils, greases, and industrial fluids since the start of his career. At 25, he’s already written for blogs, catalogs, and brand guides across the UAE. Awais’s insights help companies connect with their audience, and his clear, helpful writing style is trusted by brands in the region.
