Oil prices climbed on Monday as traders weighed the potential impact of supply disruptions from Russia amid prospects of additional U.S. sanctions and Ukrainian strikes on Russian energy infrastructure.
Brent crude futures gained $1.07, or 1.58%, to settle at $68.80 per barrel.
West Texas Intermediate (WTI) crude for October delivery rose $1.14, or 1.79%, to close at $64.80 per barrel on the New York Mercantile Exchange.
"The market is somewhat concerned that these peace negotiations will come to nothing," said Ole Hansen, head of commodity strategy at Saxo Bank.
"The market expects supply to exceed demand in the fall, but short-term geopolitical turbulence could challenge this outlook."
U.S. President Donald Trump warned again on Friday that he would impose sanctions on Russia if no progress toward a peaceful resolution in Ukraine is made within two weeks. He also indicated potential severe tariffs on India for purchasing Russian oil.
Over the weekend, U.S. Vice President JD Vance stated that Russia had made "significant concessions" toward a negotiated settlement in the three-and-a-half-year conflict.
Russian officials reported that Ukraine launched drone strikes on Sunday, causing fires at the Ust-Luga fuel export terminal. Ukraine has repeatedly targeted Russian energy infrastructure throughout the war.
The local acting governor said fires at Russia's Novoshakhtinsk refinery, triggered by Ukrainian drone attacks, continued burning for a fourth day on Sunday. The refinery primarily produces export fuels and has an annual processing capacity of 5 million tons of oil, equivalent to approximately 100,000 barrels per day.
Saxo Bank's Hansen noted that OPEC+'s reversal of production cut decisions is helping to alleviate concerns about Russian supply disruptions, as this move would add millions of barrels to market supply.
Eight members of the oil exporting organization are scheduled to meet on September 7, when they are expected to approve another production increase.
Investor risk appetite improved after Federal Reserve Chairman Jerome Powell hinted on Friday that the U.S. central bank might cut interest rates at its September meeting.
However, Priyanka Sachdev, senior market analyst at brokerage Phillip Nova, indicated that both major oil benchmarks appear to lack upward momentum, adding that markets seem increasingly convinced that Trump's tariffs will impact economic growth.