Oil prices retreated on Tuesday as traders interpreted OPEC+’s latest production decision—a pause in output increases during the first quarter—as a potential indication that the market could face oversupply.
By 0700 GMT, Brent crude futures slipped 37 cents, or 0.6%, to $64.52 a barrel, while U.S. West Texas Intermediate (WTI) fell by the same margin to $60.68 a barrel.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) announced on Sunday that it would implement a modest production hike for December but hold off on further increases in early 2026. The coalition has lifted output targets by roughly 2.9 million barrels per day—equivalent to about 2.7% of global supply—since April but has recently slowed that pace amid growing expectations of a supply surplus.
“(The) market may see this as the first sign of acknowledgement of potential oversupply situation from the OPEC+ front, who have so far remained very bullish on demand trends and ability of market to absorb the extra barrels,” said Suvro Sarkar, energy sector team lead at DBS Bank.
Still, some industry executives are pushing back against talk of an impending glut. The heads of several major European energy firms on Monday argued that global demand remains strong and that production growth is likely to moderate. Meanwhile, U.S. Department of Energy Deputy Secretary James Danly said he does not believe there will be an oil glut in 2026.
Sources within OPEC+ said the decision to maintain steady targets followed lobbying by Russia, which sought a pause as Western sanctions have made it harder for the country to expand exports. Both the U.S. and U.K. imposed new restrictions in October on Rosneft and Lukoil, Russia’s two largest oil producers.
JP Morgan analysts wrote that “our oil strategists maintain their view that while the risk of disruption has increased, U.S. measures, along with complementary actions by the UK and EU, will not prevent Russian oil producers from operating.”
Despite the current slide in prices, independent market analyst Tina Teng said the ongoing sanctions could still provide near-term support to crude markets.
Traders are now awaiting fresh U.S. inventory figures from the American Petroleum Institute (API) later in the day for additional signals. A preliminary Reuters poll indicated that U.S. crude stockpiles likely rose last week.
Leave a Reply