Oil Slides as Supply Glut Fears Mount, Even While Ukraine Negotiations Stay in Focus

Crude prices drifted lower on Tuesday, pressured by expectations that global supply will outpace demand in 2026—an outlook that overshadowed ongoing uncertainty surrounding Russia’s sanctioned oil flows amid stalled Ukraine peace talks.

Brent was down 0.5% at $63.04 a barrel by mid-morning GMT, while WTI slipped to $58.56, also a 0.5% decline.

Both benchmarks rallied the previous session after renewed skepticism that a diplomatic breakthrough between Ukraine and Russia was anywhere near, reducing the likelihood of restricted Russian oil returning freely to markets.

But analysts increasingly warn that next year’s fundamentals point to a looser market regardless of geopolitics. Forecasts consistently show that production growth is set to outstrip consumption.

Priyanka Sachdeva of Phillip Nova cautioned that “in the short-term, the key risk is oversupply and current price levels seem vulnerable.”

Tighter sanctions on Rosneft and Lukoil, along with restrictions on refined products derived from Russian crude, have already caused some Indian refiners—including Reliance—to scale back purchases.
With buyers limited, Russia has shifted its attention toward China. Deputy Prime Minister Alexander Novak said in Beijing that the two nations are exploring ways to expand oil trade.

Deutsche Bank echoed the bearish trend, projecting a surplus of at least 2 million barrels per day in 2026 with little indication of deficits returning before 2027. Analyst Michael Hsueh noted that “the path forward into 2026 remains a bearish one.”

While stalled peace negotiations would ordinarily support prices due to the persistence of sanctions, the market appears more concerned with the possibility of oversupply.

Hopes for a U.S. rate cut in December are offering some relief. With multiple Federal Reserve officials signaling openness to easing policy, traders are betting that lower borrowing costs could help bolster demand.

As Sachdeva summed it up: “The oil market is in a tug-of-war between a caution-driven supply overhang and demand hopes predicated on easier monetary policy.”