Oil Rally Fueled by Fed Rate Cut Hopes—But Peace Deal Could Kill the Momentum

Crude got some love on Monday, climbing $0.73 to $58.79/bbl (+1.26%) as Wall Street’s rally sparked fresh optimism about energy demand and a potential Fed rate cut.

The Bull Case: Fed officials are finally singing the same tune. New York Fed President John Williams and Governor Christopher Waller both signaled December rate cuts are coming, citing labor market weakness. Investors bought the dip—major indices jumped, and with them, expectations for stronger economic growth and oil consumption.

The Curveball: But here’s where it gets tricky. Trump’s 28-point Russia-Ukraine peace proposal (which critics say heavily favors Russia) sparked negotiations in Geneva. The U.S. and Ukraine jointly announced they’re closing in on a “revised peace framework,” and while Trump cryptically said “something good just may be happening,” neither side released details.

Why does this matter? If peace actually happens, Russian oil sanctions could lift. That means Rosneft and Lukoil flooding the market with cheap barrels—a nightmare for prices. China, India, and Turkey have already started pivoting away from Russian oil due to Trump’s tariff threats, but a de-escalation reverses that dynamic.

Headwinds Still Blowing:

• Dollar strength continues pressuring crude
• OPEC+ talking about raising production
• Demand growth concerns haven’t disappeared

The Takeaway: Monday’s bounce is real, but fragile. Oil is caught between Fed optimism (bullish) and peace talk uncertainty (bearish). Next moves depend entirely on whether these negotiations actually stick. Watch the headlines.