Oil News: Crude Futures Jump 3% on Russia Supply Risk and Fed Rate Cut Hopes

Crude Oil Surges as Russia Supply Risks Grow, Fed Rate Bets Build

Support remains layered, with $64.05 now acting as the first technical floor. A failure to hold this level would expose prices to a pullback toward the 200-day moving average at $63.28. A deeper breakdown could ultimately retest the primary bottom at $61.12.

At 11:04 GMT, Light Crude Oil Futures are trading $65.92, up $1.91 or +2.98%.

Russia-Ukraine Escalation Fuels Oil Supply Risk Premium

Oil’s upward momentum is being reinforced by growing disruptions to Russian supply. Ukrainian drone strikes have taken out at least 17% of Russia’s refining capacity—roughly 1.1 million barrels per day—according to Reuters. President Zelenskyy’s vow for “deep strikes” suggests the threat to infrastructure is ongoing.

Meanwhile, diplomatic tensions are adding further pressure. The U.S. has tightened tariffs on Indian imports, attributing the move to India’s continued Russian crude purchases, prompting criticism from New Delhi. Though Washington has so far avoided sanctioning China—Russia’s top oil buyer—geopolitical risks are now firmly embedded in oil price projections.

OPEC+ Holds Steady as Supply Cuts Support Market

Traders are also focused on the upcoming September 7 OPEC+ meeting, where eight core members—including Saudi Arabia and Russia—will assess output strategy. While the group recently accelerated the rollback of a 2.2 million bpd cut, analysts at ING expect no major policy shift in October. The prevailing view is that supply will remain tight, and the larger risk lies in potential reinstatement of deeper cuts if the market softens.

SEB Commodities, however, warned in a client note that prices could average as low as $55 in Q4 unless OPEC+ intervenes again. Such bearish estimates are currently being counterbalanced by physical disruptions and geopolitical tensions.

Federal Reserve in Focus as Rate Cuts Could Support Oil

On the demand side, attention is turning to U.S. labor data due later this week, which could influence the Fed’s next rate decision. A weaker jobs report would bolster expectations for monetary easing at the September 16–17 meeting. A rate cut would likely pressure the dollar and support demand for dollar-denominated commodities like crude.

Oil Prices Forecast: Bullish Momentum Firmly in Play

With technical breakouts aligning with tightening physical supply and potential Fed easing, the near-term outlook for oil remains bullish. If WTI clears $66.18, traders should prepare for a fast move toward $68.70, with supply risks and macro policy shifts offering a supportive backdrop. However, any failure to hold above the 50-day average could reverse momentum sharply.

More Information in our Economic Calendar.