(RTTNews) – Crude oil posted sharp gains on Monday as the prospect of US involvement in the Russia-Ukraine war raised fresh concerns about a military escalation and the threat of new sanctions on Russian oil exports.
WTI crude oil for November delivery was last seen trading $0.67 (or 1.14%) higher at $59.57 a barrel.
In Europe, after Russia increased its military aggression over the past few weeks, Ukrainian President Volodymyr Zelensky asked the US to supply Tomahawk missiles to the country to counter Russia.
It is noteworthy that Tomahawk is a long-range cruise missile with a range of 2,500 kilometers, which is launched from the sea.
US President Donald Trump responded by saying that the US would supply the missiles, which would end the ongoing conflict. Not taking this lightly, Russia was furious, with an aide to Russian President Vladimir Putin issuing threats and labeling Trump a “trade peacemaker.”
Traders are concerned that further US involvement in the war could provoke Russia and lead to further military escalation, as well as force the US to impose harsh sanctions on Russian oil exports, disrupting oil trade.
Last week, knowing about China’s export restrictions on rare earth minerals, Trump announced new tariffs of 100% starting on November 1, on top of previous import tariffs. Additionally, he mentioned plans to control the export of “critical software” (without elaborating on what he meant).
However, China, without any fear, urged the US to adopt diplomatic rather than coercive strategies to resolve trade-related issues.
In a later message, Trump said, “All is well with China”.
This raised hopes of easing tensions between the world’s two largest economies as well as huge oil consumers, improving market sentiment.
In a significant development in the Middle East, Israel and Hamas last week swapped Palestinian prisoners along with all remaining Israeli hostages as part of the first phase of the Gaza peace plan proposed by Trump.
This has reduced the geopolitical risk premium, which had previously kept oil prices volatile due to fears of attacks on global crude supply routes. This also eliminates the possibility of Houthi attacks in the Red Sea.
This progress, along with a rise in the US dollar (99.21), kept oil prices from rising much higher.
Various US agencies have imposed sanctions on approximately hundreds of individuals, entities, companies and vessels involved in the movement of Iranian energy products that generate petrodollars for Tehran.
In its monthly market report, OPEC forecasts global oil demand will rise by 1.3 million barrels per day in 2025 and 1.4 million bpd in 2026. OPEC expects global oil demand to average 105.1 million bpd in 2025 and 106.5 million bpd next year, with emerging markets the key driver.
Estimated OPEC+ crude oil demand was also the same as last month’s report, at 42.5 million barrels per day this year, with demand expected to rise to 43.1 million barrels per day next year.
OPEC’s optimism stands in sharp contrast to recent warnings from the International Energy Agency, which has predicted a significant increase in global oil reserves in the second half of 2025 due to supply exceeding demand.
Meanwhile, the government shutdown in America continued for the thirteenth day today.
The Bureau of Labor Statistics is set to publish the September 2025 Consumer Price Index on October 24. Many other key economic indicators are no longer available to the markets, as well as the US Federal Reserve, which uses these numbers to decide on interest rates in its monetary policy meetings.
Despite this, the CME Group FedWatch tool still indicates that investors see a 96.7% chance of a 25-basis-point rate cut at the upcoming October 28-29 Federal Reserve meeting.
According to analysts, amid the China-US trade standoff, easing of tensions in the Middle East and intensification of the Russia-Ukraine war, oil prices are expected to be influenced by the trajectory of the US dollar after the Fed meeting as crude oil is a dollar-denominated commodity.
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