Oil prices rose on Monday as investors assessed the impact of Ukrainian drone attacks on Russian refineries, while US President Donald Trump signaled readiness to impose new sanctions on Russia if NATO countries stop purchasing Russian oil.

Brent crude futures gained 32 cents, or 0.5%, to $67.31 a barrel by 08:00 GMT, while US West Texas Intermediate rose by the same amount to $63.01 a barrel.

Russian authorities said Ukraine launched a large-scale attack late Sunday using at least 361 drones targeting Russian territory, sparking a limited fire at the massive Kirishi refinery in the northwest of the country.

Both benchmarks had recorded gains of more than 1% last week as Ukraine stepped up its attacks on Russian oil infrastructure, including Primorsk port, Russia’s largest oil export terminal.

Analysts at J.P. Morgan led by Natasha Kaneva wrote in a note: “The attack highlights a growing willingness to disrupt global oil markets, which could add upward pressure on prices,” referring to the Primorsk strike.

Primorsk port has a loading capacity of nearly 1 million barrels per day, while the Kirishi refinery processes about 355,000 barrels per day, equivalent to 6.4% of Russia’s total oil output.

IG markets analyst Tony Sycamore said: “If we are seeing a strategic shift in Ukraine’s approach to targeting Russian oil export infrastructure, that carries upside risks for price forecasts,” despite ongoing concerns about oversupply amid OPEC+ plans to increase production.

Pressure on Russia is also mounting after Trump said on Saturday that the US is prepared to impose new sanctions on the Russian energy sector, but only if all NATO members halt purchases of Russian oil and adopt similar measures.

At the same time, investors are closely watching US-China trade talks in Madrid, which began on Sunday amid US pressure on its allies to impose tariffs on Chinese imports over Beijing’s continued buying of Russian oil.

US data released last week showed a slowdown in job creation alongside rising inflation, stoking concerns about weaker growth in the world’s largest economy and biggest oil consumer.

The US dollar rose slightly on Monday, as traders await the Federal Reserve’s monetary policy meeting, which is expected to shape the outlook for foreign exchange markets during the fourth quarter of the year.

At 04:10 a.m. Eastern Time (08:10 GMT), the US dollar index – which measures the performance of the US currency against a basket of six major currencies – rose by 0.1% to 97.175, after losing more than 10% since the beginning of the year.

The Federal Reserve in Focus

The Federal Reserve is set to conclude its two-day meeting on Wednesday, where it is widely expected to cut interest rates after recent data showed a continued deterioration in the US labor market, while inflation in August did not rise as sharply as investors had feared.

According to the CME FedWatch tool, markets are pricing in a 96.4% probability of a 25 basis point rate cut at the September 16–17 meeting, and only a 3.6% probability of a larger 50 basis point cut.

Analysts at ING said in a research note: “We expect the dollar to remain under slight pressure before the meeting, and it could fall further if a 50 basis point cut appears closer than most traders currently expect.”

In addition to the Fed meeting, this week’s agenda includes the release of US retail sales data for August on Tuesday, and weekly jobless claims and July TIC data on Thursday.

ING added: “Last week’s surge in jobless claims briefly weighed on the dollar, and TIC data will be scrutinized for signs that foreign investors are not only hedging against US assets but also moving to sell them outright.”

French Political Risks Pressure the Euro

In Europe, the euro/dollar pair fell slightly to 1.1732, as the euro failed to benefit from the dollar’s weakness due to ongoing political uncertainty in France, especially after Fitch on Friday downgraded France’s sovereign credit rating by one notch to A+.

Traders are focusing domestically on whether new Prime Minister Sébastien Lecornu can unify the divided national parliament around the path of fiscal consolidation, which remains necessary despite his lack of popularity.

ING added: “We expect currency traders to monitor France’s debt profile closely, although our base case does not point to it turning into a new eurozone crisis.”

As for the pound/dollar pair (GBP/USD), it rose by 0.2% to 1.3582, supported by expectations ahead of the Bank of England’s meeting scheduled for Thursday. The bank cut rates last month for the fifth time in just over a year, but it is expected to keep policy unchanged this week as July inflation stood at 3.8%, the highest among G7 nations and nearly double the bank’s medium-term target.

However, data released late last week showed that UK growth stalled in July, after relatively strong performance in the first half of 2025.

The Yuan Falls after Weak Economic Data

In Asia, the dollar/yen pair fell by 0.1% to 147.48 in thin trading affected by Japan’s public holiday marking “Respect for the Aged Day.”

The dollar/yuan pair (USD/CNY) edged down to 7.1233, amid the continued release of weak economic data in China. August figures showed that industrial production, retail sales, and fixed asset investment all grew less than expected, while the unemployment rate unexpectedly rose to 5.3%.

These figures follow last week’s weak inflation data, which confirmed the persistence of disinflationary pressures in the world’s second-largest economy.

Gold prices declined in the European market on Monday at the beginning of the week’s trading, pressured by correction and profit-taking activity from record levels, in addition to the continued rebound of the US dollar in the foreign exchange market.

On Tuesday, the Federal Reserve’s key monetary policy meeting will begin, with decisions due on Wednesday. Expectations in global financial markets are currently stable around a 25 basis point interest rate cut by the Fed.

Gold prices today: prices fell by 0.45% to $3,626.69 an ounce, from the opening level of $3,642.72, and recorded a high of $3,646.94.

At Friday’s settlement, gold prices rose by 0.25%, the second gain in the past three days, near the all-time high of $3,674.80 an ounce.

Over the past week, gold gained 1.55%, marking a fourth consecutive weekly rise, supported by expectations of Fed rate cuts and mounting global financial stability concerns.

The US dollar index rose on Monday by about 0.1%, maintaining gains for the second consecutive session, reflecting the continued rebound of the US currency against a basket of major and minor counterparts. In addition to buying activity from lower levels, the dollar’s rebound comes amid reluctance to build new short positions ahead of the Fed meeting this week.

The Federal Reserve’s monetary policy meeting begins on Tuesday, with decisions due on Wednesday. Expectations point to a 25 basis point interest rate cut. Monetary policy data, economic projections, and statements from Fed Chair Jerome Powell are expected to provide clear guidance on whether further cuts may follow during the remainder of this year.

According to CME FedWatch: the probability of a 25 basis point rate cut at this week’s meeting is stable at 100%, while the probability of a 50 basis point cut is stable at 4%.

The probability of a 25 basis point cut in October is also stable at 100%, while the probability of a 50 basis point cut stands at 5%.

Tim Waterer, chief market analyst at KCM Trade, said: “Gold appeared technically overbought, which prompted some profit-taking at the start of the new week. The resilience of the dollar is another factor weighing on gold.”

Waterer added: “A period of consolidation is a likely scenario for gold, while any retreat towards support at $3,500 is expected to attract buyers, as long as the Fed maintains its cautious approach.”

Goldman Sachs said in a note on Friday: “While we see upside risks to our $4,000 forecast by mid-2026, elevated speculative positioning increases the likelihood of tactical pullbacks, as investor positions tend to normalize over time.”

Holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 3.15 metric tons on Friday, marking a second consecutive daily decline, bringing the total to 974.80 metric tons, the lowest since August 28.

The euro fell in European trading on Monday against a basket of global currencies, heading toward its first loss in three sessions versus the US dollar, pressured by concerns over France’s financial stability following a credit downgrade for the eurozone’s second-largest economy.

After last week’s hawkish European Central Bank meeting, the chances of further rate cuts in Europe by year-end diminished. To confirm these expectations, investors are now waiting for additional evidence on the future path of monetary easing in the euro area.

Price Overview

• Euro exchange rate today: the euro declined against the dollar by more than 0.1% to $1.1722, from an opening of $1.1735, after hitting a high of $1.1736.

• The euro ended Friday slightly higher, gaining less than 0.1% against the dollar in its second consecutive daily advance.

• Last week, the euro gained 0.2% versus the dollar, also its second straight weekly rise, supported by reduced odds of further European rate cuts compared to rising expectations of US Federal Reserve easing.

Financial Stability in France

Fitch’s decision on Friday to downgrade France’s sovereign credit rating to its lowest ever triggered widespread concern in global financial markets. The loss of AA- status for the eurozone’s second-largest economy is viewed as a troubling sign of Europe’s fiscal fragility.

The downgrade reflects a combination of domestic political tensions and worsening public debt, adding pressure to European bond markets and raising fears among investors of contagion to other economies within the bloc.

European Interest Rates

• In line with expectations, the ECB last week left its main interest rate unchanged at 2.15%, the lowest level since October 2022, marking the second consecutive meeting with no change.

• In its monetary policy statement, the ECB said inflation is currently nearing its 2% medium-term target and that the Governing Council’s overall assessment of inflation expectations remained broadly unchanged.

• Sources indicated that policymakers believe no further rate cuts are needed to reach the 2% inflation goal, despite new economic forecasts pointing to lower rates over the next two years.

• Sources also noted that unless the eurozone faces another major economic shock, borrowing costs are expected to remain at current levels for some time.

• Market pricing for an October rate cut of 25 basis points has dropped from 30% to under 10%.

• Traders have pared back bets on ECB easing, signaling an end to this year’s rate-cutting cycle.

• To reassess these expectations, investors will closely monitor upcoming European economic data and remarks from ECB officials in the coming period.