Oil prices ease as traders eye US Fed rate cut amid geopolitical concerns

Geopolitical tensions and expected rate cut provide market floor

Oil prices eased on Wednesday after gaining more than 1% in the previous session, as ongoing geopolitical concerns provided support for the market. At 0810 GMT, Brent crude futures were down 33 cents, or 0.5%, at $68.14 per barrel, while US West Texas Intermediate (WTI) crude futures fell 32 cents, or 0.5%, to $64.20 per barrel.

The previous session’s gains were driven by concerns that Russian oil supplies could be disrupted by Ukrainian drone attacks on critical infrastructure. PVM Oil Associates analyst John Evans noted that if the damage to Russian energy infrastructure proves temporary, oil prices could return to the recent range of around $5 per barrel.

Geopolitical tensions, including risks from conflicts and the global supply situation, continue to support oil prices. However, analysts caution that global supply may remain oversupplied in the latter half of 2025, with OPEC+ expected to raise output.

Investors are also closely watching the outcome of the US Federal Reserve’s meeting on September 16–17, with expectations of a 25-basis-point interest rate cut. Senior market analyst Priyanka Sachdeva from Phillip Nova said the potential rate cut could ease borrowing costs and boost fuel demand, further supporting the oil rally.

On the supply side, sources indicated that US crude and gasoline stocks fell last week, while distillate stocks rose. Market participants are awaiting additional data from the US Energy Information Administration, with analysts forecasting a decline in crude inventories and an increase in distillate and gasoline stockpiles.

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