On Wednesday, global benchmarks surged as investors reacted to a weakening U.S. dollar and fading prospects for an immediate ceasefire in Europe. Consequently, oil prices rise as traders bet on upcoming economic stimulus.
Brent crude gained 1.3% to settle at $63.48. Meanwhile, U.S. West Texas Intermediate (WTI) outperformed slightly, jumping 1.6% to reach $59.89 per barrel.
Dollar Weakness Drives Demand
The primary catalyst for this upswing is the crumbling U.S. currency.
Following data revealing a slowdown in American employment, the market is pricing in a Federal Reserve interest rate cut. This expectation has sent the greenback tumbling for ten consecutive days.
A cheaper dollar acts as a discount for international buyers holding other currencies. As a result, global demand for crude often strengthens.
“I think the potential for a rate cut is overshadowing everything right now and driving crude prices up,” noted Phil Flynn, a senior analyst with Price Futures Group.
Peace Talks Collapse
Geopolitics provided a secondary floor for the market.
Recently, representatives for U.S. President Donald Trump exited negotiations with the Kremlin without securing a deal. Previously, the market had dipped on fears that a swift resolution would unleash a flood of Russian supply.
With talks now stalled, that immediate supply threat has evaporated. This diplomatic failure ensures that Russian barrels remain constrained, supporting the sentiment that sees oil prices rise in the short term.
Infrastructure Under Fire
Physical risks to supply are also intensifying.
Ukraine has escalated its strikes on Russian energy assets. A military source confirmed a fifth attack on the Druzhba pipeline in the Tambov region.
Consultancy firm Kpler described a tactical evolution in the conflict.
“Ukraine’s drone campaign against Russian refining infrastructure has shifted into a more sustained and strategically coordinated phase,” Kpler reported.
This strategy is effectively choking output. Kpler added, “This has pushed Russian refining throughput down to around 5 million barrels per day between September and November… with gasoline hit hardest.”
Headwinds Remain
Despite the rally, the market faces significant bearish pressure.
U.S. crude inventories defied expectations, swelling by 574,000 barrels last week. Furthermore, Saudi Arabia has engaged in a price war, slashing its official selling price for Asia to a five-year low to defend market share.
Analysts caution that upside potential is capped.
“War and politics, balanced against comfortable stocks, expected supply surplus, and OPEC’s market-share strategy, keep Brent in the $60–$70 range for now,” stated PVM analysts.
Reflecting this reality, Fitch Ratings has downgraded its price assumptions for the 2025-2027 period.
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