Oil prices rose on Monday after the European Union announced new sanctions against Russia and tensions increased over alleged violations of Baltic airspace. Investors also monitored the prospects of further U.S. Federal Reserve interest rate cuts.
Brent crude traded at $66.68 per barrel at 9:38 a.m. local time (06:38 GMT), up 0.84% from the previous close of $66.12. U.S. benchmark West Texas Intermediate (WTI) rose 0.88% to $62.87 from $62.32.
The gains followed the European Commission’s proposal of its 19th sanctions package targeting Russia. The measures focus on Russian LNG, oil revenues, shadow fleet vessels, banks, cryptocurrencies, and the export of military-use goods.
“The Commission’s proposal for the 19th sanctions package will aim to weaken Russia’s already weakened war economy further,” EU Commissioner Valdis Dombrovskis said at a Eurogroup press conference in Copenhagen.
Dombrovskis said Europe’s sanctions are the strongest implemented globally and highlighted their effectiveness within the G7’s coordinated approach. He added that G7 measures have already imposed costs on the Russian economy in the hundreds of billions of dollars.
“But it is clear that we must step up the pressure against Russia further to make its war of aggression unsustainable,” he said, noting that full details would be released soon.
Oil prices also strengthened after Russia allegedly violated Baltic airspace. On Friday, three suspected Russian MiG-31 fighter jets entered Estonian airspace over the Gulf of Finland for 12 minutes without permission.
U.S. President Donald Trump indicated he would defend Poland and the Baltic states if Russia escalates further. “Yeah, I would,” he said before attending a memorial service in Glendale, Arizona.
Meanwhile, markets weighed optimism about further U.S. interest rate cuts and positive outcomes from Trump’s recent meeting with Chinese President Xi Jinping. This optimism was tempered by a new U.S. policy requiring companies to pay a $100,000 annual fee for H-1B work visas, which analysts said could affect global risk appetite.
Investors are closely following the Fed’s policy path, with markets pricing in 44 basis points of rate cuts over the remaining two meetings of the year. Analysts note that lower interest rates can stimulate economic growth and oil demand by reducing borrowing costs for consumers.
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