Oil prices edged lower on Tuesday as renewed worries about a potential supply glut in 2026 outweighed ongoing uncertainty surrounding Russian crude flows, with negotiations to end the war in Ukraine showing little progress.
Brent crude slipped 33 cents, or 0.5%, to $63.04 a barrel at 07:30 GMT, while West Texas Intermediate (WTI) was down 28 cents, also 0.5%, at $58.56.
Prices had climbed 1.3% on Monday, supported by skepticism over whether a Russia-Ukraine peace agreement is achievable anytime soon. A lack of breakthrough raised doubts that Russian crude and refined products—still restricted by Western sanctions—would return freely to global markets.
Yet despite these geopolitical concerns, forecasts pointing to stronger supply growth than demand next year continue to weigh on sentiment. Many analysts see 2026 shaping up as a year of looser balances.
“In the short-term, the key risk is oversupply and current price levels seem vulnerable,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
Additional pressure is coming from shifting trade flows. New sanctions targeting oil giants Rosneft and Lukoil, along with rules blocking sales of products refined from Russian crude into Europe, have led some Indian refiners—especially privately owned Reliance—to scale back purchases from Russia.
With fewer buyers, Moscow has increasingly turned toward China. Speaking at a China-Russia business forum in Beijing, Russian Deputy Prime Minister Alexander Novak said the two countries have been discussing ways to boost Russian oil exports to the Chinese market.
Still, broader market attention remains fixed on the long-term supply outlook. Deutsche Bank projects a surplus of at least 2 million barrels per day in 2026 and sees “no clear path back to deficits” through 2027.
“The path forward into 2026 remains a bearish one,” analyst Michael Hsueh said.
Expectations for a softer market next year are overshadowing the lack of movement on a Ukraine peace deal—an outcome that could remove sanctions and release additional Russian barrels onto the global market.
However, crude prices have found some support from rising confidence that the U.S. Federal Reserve will cut interest rates at its December 9–10 meeting, after policymakers indicated they favor easing.
Lower borrowing costs typically stimulate economic activity, which can help lift oil consumption.
“The oil market is in a tug-of-war between a caution-driven supply overhang and demand hopes predicated on easier monetary policy,” Sachdeva added.