Post by : Badri Ariffin

Global oil markets saw mixed movements on Tuesday as traders grappled with persistent oversupply concerns and geopolitical developments. Brent crude dipped 0.49% to $62.42 per barrel, while West Texas Intermediate (WTI) rose 0.56% to $58.59, reflecting the complex interplay between market fundamentals and diplomatic developments.

Oversupply Pressure Keeps Prices in Check

Despite attempts by OPEC+ to manage production, global oil output continues to exceed demand. Analysts estimate a 2025 supply surplus of roughly 2.5 million barrels per day. Production increases are coming not just from OPEC members, but also from non-OPEC countries like the U.S., Brazil, Canada, and Argentina. Offshore projects in Brazil and Guyana have delivered ahead-of-schedule supply, adding further pressure on prices.

Global demand is expected to rise modestly by 1.0 to 1.3 million barrels per day, mainly driven by emerging markets such as China and Nigeria. Meanwhile, consumption in OECD countries remains flat or slightly declining, reflecting energy efficiency gains and a gradual shift toward alternative sources.

Geopolitical Uncertainty Influences Markets

Investor attention remains sharply focused on ongoing peace negotiations between Russia and Ukraine. A potential agreement could lead to eased sanctions on Russian producers like Rosneft and Lukoil, introducing additional crude into global markets and worsening oversupply pressures. Until any concrete developments occur, traders are navigating a fine line between fears of abrupt supply shocks and expectations of a stabilized regional energy market.

Production Outlook and Technological Boosts

OPEC+ has raised output quotas several times this year but signaled a more cautious approach moving into 2026, aiming to avoid excessive stockpiles. Meanwhile, non-OPEC nations continue to ramp up production, aided by technological advances and faster timelines for offshore projects, particularly in South America. The U.S. Energy Information Administration (EIA) forecasts a 2 million barrel per day increase in non-OPEC supply for 2025.

Currency and Macroeconomic Factors

A strengthening U.S. dollar has added pressure on oil prices by making crude more expensive for buyers using other currencies. Markets are also attentive to upcoming U.S. Federal Reserve policy decisions, with any hints of monetary easing in 2026 potentially supporting prices by boosting demand expectations.

Analysts anticipate Brent crude may trend toward $54-$55 per barrel in the first quarter of 2026, unless unexpected supply constraints or demand spikes emerge. Inventory buildups, cautious consumption forecasts, and ongoing geopolitical tensions suggest the market will remain closely monitored as producers attempt to maintain balance.

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