Oil prices on track for fourth monthly drop amid Russia-Ukraine uncertainty

Oil prices were up on Friday, on track for a weekly rise, but were still headed for a fourth straight monthly decline amid stalled peace talks between Russia and Ukraine, and ahead of a key Opec+ meeting on Sunday.

Brent, the benchmark for two-thirds of the world's oil, was up 0.03 per cent to $63.36 per barrel at 2.28pm UAE time. West Texas Intermediate, the gauge that tracks US crude, added 0.73 per cent to $59.08 a barrel.

From last week's close, Brent and WTI are on track to jump 2.5 per cent and 1.75 per cent, respectively. But from October, Brent is on pace to drop by about 2 per cent, while WTI is heading for a slide of more than 3 per cent.

Year-to-date, Brent has given up about 15 per cent, while WTI has retreated by nearly 18 per cent.

The US plan to end the Russia-Ukraine war, which began in February 2022, involves several key conditions, revolving around a 28-point peace plan backed by US President Donald Trump, who has claimed that there remain only a “few points of disagreement”.

However, the talks have dragged on, reflected by oil price movements: earlier this week, crude declined amid speculation a peace deal was near, but rose again after negotiations stalled towards the weekend.

Additionally, it remains to be seen how talks between the US and Russia on lifting economic sanctions on the latter will pan out, which will have an effect on markets as oil from Russia – the world's third biggest producer – would be integrated into the sector.

Crude is then under strong short-term bearish pressure, especially with WTI hanging on to its $58 support level, said Vijay Valecha, chief investment officer at Dubai-based Century Financial.

“The outlook is dominated by three main drivers: a potential geopolitical breakthrough with US-Russia talks; a looming structural surplus estimated for 2026, and a change in strategy of the Opec+ group towards defending market shares rather than prices. And finally, the seasonality effect, which continues to pressure oil,” said Valecha.

Opec+ is reportedly expected to maintain its crude production levels at the closely watched meeting over the weekend.

The supergroup of oil producers, led by Saudi Arabia and Russia, earlier this month agreed to another output increase for December, but agreed to pause production increases for the first quarter of 2026.

Opec+'s expected intention of pausing production increases would “relieve downside pressure” on the market, said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.

Also, crude has been supported by growing expectations that the US Federal Reserve will cut interest rates again in December, which would provide a boost to both the economy and energy demand.

“Indeed, oil prices have been falling this year despite many rate cuts from major central banks and a cheaper US dollar – both fundamentally supportive of prices,” Ms Ozkardeskaya said.

“That means that ample Opec and non-Opec supply has weighed heavier on price dynamics.