Oil Prices Start the New Week with a Decline

In a context where attention has turned to the Federal Reserve's meeting this week, oil prices have retreated from the highest levels seen in recent weeks. However, the declines remained limited due to concerns over supply disruptions if the U.S. imposes more sanctions on its main suppliers, Russia and Iran.

Brent crude oil fell 25 cents, or 0.34%, to $74.24 per barrel this morning. U.S. West Texas Intermediate crude dropped 36 cents, or 0.5%, to $70.93 per barrel.

IG market analyst Tony Sycamore noted, “After last week's +6% rally and the recent peak levels of crude oil, we are likely seeing some light profit-taking. Additionally, many trading desks in banks and funds may have closed shop at the end of last week, which could have reduced the appetite for taking positions during the holiday season.”

Oil prices were supported last week by the European Union's new sanctions on Russian oil and expectations of tighter sanctions on Iranian supply. U.S. Treasury Secretary Janet Yellen stated that the U.S. is considering imposing additional sanctions on "dark fleet" tankers and would not rule out sanctioning Chinese banks as it seeks to reduce Russia's oil revenue and access to foreign resources amid the war in Ukraine.