Oil Prices Ease as Markets Await Fed Decision

Oil prices slipped on Wednesday, retreating from gains made in the previous session, as traders balanced geopolitical risks with expectations of an imminent U.S. interest rate cut. Brent crude futures fell 0.9% to $67.85 a barrel by 10:42 GMT, while U.S. West Texas Intermediate futures dropped 1% to $63.89. Both benchmarks had closed more than 1% higher on Tuesday amid concerns over potential disruptions to Russian oil supplies following Ukrainian drone attacks on key export facilities.

Industry sources told Reuters that Russia’s state-controlled pipeline monopoly, Transneft, has warned producers they may need to curb output after the strikes on ports and refineries. The reports underscore heightened supply risks from the conflict, which helped underpin prices earlier in the week.

Meanwhile, Kremlin spokesperson Dmitry Peskov stated that European Union plans to accelerate the phase-out of Russian energy imports would not affect Russia. Despite sweeping sanctions, the EU continues to import billions of euros worth of Russian commodities, including liquefied natural gas and enriched uranium, though its oil and gas purchases have sharply declined.

Investor focus has now shifted to the outcome of the U.S. Federal Reserve’s two-day policy meeting, concluding later Wednesday. Markets have largely priced in a 25 basis-point cut, which could ease borrowing costs and support fuel demand, but traders will pay close attention to Chair Jerome Powell’s comments and the updated rate projections. The meeting will also feature Stephen Miran, a new governor on leave from the Trump administration, joining deliberations for the first time.

Adding to the mix, market participants cited American Petroleum Institute data showing U.S. crude and gasoline inventories declined last week, while distillate stocks increased. Official government figures from the Energy Information Administration are due later in the day, with analysts polled by Reuters expecting crude inventories to fall and gasoline and distillate stocks to rise.