Why Oil Prices Remained Firm Amid Russia Supply Concerns and U.S. Rate Outlook

Oil markets held steady on Tuesday as traders balanced fears of supply disruption from recent Russian refinery damage against growing expectations that the U.S. Federal Reserve will cut interest rates. Brent crude and U.S. West Texas Intermediate both edged slightly lower, but not enough to shake market confidence in the fragile balance of supply and demand.
Ukraine’s intensifying drone strikes on Russia’s energy infrastructure—including targeted hits on key refineries and export terminals like Primorsk—have raised fresh alarms about crude flow interruptions. Although these attacks have reduced refining capacity, experts note that global supply may shrink only marginally, since several Asian nations are still maintaining imports of Russian crude despite increased geopolitical risk. This continuing demand is seen as a stabilizing factor amid broader uncertainty.
On the monetary policy front, all eyes are on the Fed’s meeting scheduled for September 16-17. Markets widely expect a 25 basis-point rate cut, which has softened borrowing costs and weakened the U.S. dollar. A weaker dollar tends to make oil cheaper for holders of other currencies, thereby supporting demand. Expectations that U.S. crude and gasoline inventories dropped last week are also working in oil’s favor, helping offset fears of reduced consumption in key markets.
Still, risks persist. U.S. demand remains under watch: weak or cooling economic signals could undermine global energy consumption. On top of that, possible tightening of trade and sanction policies—especially involving Russia, China, Europe, and India—could change import-export flows drastically. Analysts warn that inventory draws, while helpful for market sentiment, may not be sufficient to sustain prices if demand softens broadly.