Oil Rally Gets Real Boost From Fed Rate Cut Bets—But Peace Talks Throw a Wrench

Crude just had a solid Monday: WTI jumped 1.26% to $58.79/barrel, riding the coattails of Wall Street’s latest love affair with rate cuts.

The rate cut narrative is back. Fed officials are basically signaling cuts are coming—John Williams dropped hints about labor market weakness last Friday, and Christopher Waller just doubled down on a December cut. Market heard “rate cuts” and immediately priced in stronger economic growth = more energy demand = oil goes up. Classic playbook.

But here’s the plot twist: Peace talks between Russia and Ukraine are heating up. Trump’s 28-point proposal dropped last week, and despite Ukraine pushing back (understandably, since the terms reportedly favor Russia), both sides are now claiming they’re “closing in on a revised framework.” If this actually goes somewhere, Russian oil sanctions could lift, flooding the market with cheap crude. That’s bearish pressure—and it showed up in yesterday’s trading.

The sanctions angle matters more than you think. The U.S. has Russia’s two biggest oil exporters (Rosneft, Lukoil) in a stranglehold. China, India, and Turkey are already shopping around for alternatives due to Trump’s “penalty tariff” threats. A peace deal = sanctions gone = massive supply dump. That’s a lot of downward pressure waiting in the wings.

What’s weighing on oil right now:

• Strong dollar (fighting against oil prices)
• OPEC+ expansion plans (more supply coming)
• Lingering demand growth concerns

Bottom line: The rate cut story is propping up oil today, but geopolitical risk is real. Peace talks could be bullish for stocks (risk-off unwind) but bearish for crude (supply fears). Watch the dollar and listen for any actual deal announcements—those will move oil more than Fed chatter at this point.