Oil prices continued their downward trajectory for a third consecutive session on Friday, influenced by the U.S. advocacy for a peace agreement between Russia and Ukraine, which could potentially increase oil supplies in the global market. Concurrently, uncertainty surrounding U.S. interest rate reductions has dampened investor risk appetite. Brent crude futures experienced a decline of 71 cents, equating to a 1.12% drop, settling at $62.67 a barrel by 0212, following a modest decrease of 0.2% in the preceding session. U.S. West Texas Intermediate crude stood at $58.29 a barrel, reflecting a decline of 71 cents, or 1.20%, following a 0.5% decrease in the previous day’s closing.

Both contracts are poised to decline by over 2% this week due to concerns regarding oversupply. This week, market sentiment shifted towards a bearish outlook as Washington advocated for a peace plan aimed at resolving the three-year conflict between Ukraine and Russia. This development comes in the context of impending sanctions on leading Russian oil producers, which are set to take effect on Friday. Lukoil faces a deadline of December 13 to divest its substantial international portfolio.

“With Ukraine yet to formally reject the deal, the slim odds of an agreement are weighing on prices, as it would remove much of the war’s geopolitical risk premium baked into crude,” noted market analyst Tony Sycamore. The appreciation of the dollar has been exerting downward pressure on oil prices, as it renders the commodity pricier for those holding alternative currencies.

The dollar appeared poised for its strongest weekly performance in more than a month on Friday, as investors speculated that the Federal Reserve is unlikely to implement rate cuts in the upcoming month.