Oil Prices Decline Amid Oversupply Fears Following OPEC+ Production Decision
Oil markets retreated Tuesday after OPEC+ announced it would maintain current production levels through the first quarter of 2025, signaling concerns about potential oversupply.
Brent crude futures dropped 15 cents, or 0.2%, to $64.74 per barrel by 05:05 AM WAT. Meanwhile, U.S. West Texas Intermediate crude declined 14 cents, or 0.2%, settling at $60.91. The OPEC Basket price also fell 0.26 cents to $66.72 per barrel.
The decision follows Sunday’s agreement by the producer alliance to implement only a modest output increase for December before pausing further production hikes early next year.
Production Adjustments Continue
Since April, OPEC+ has gradually increased output targets by approximately 2.9 million barrels per day—representing about 2.7% of global supply. However, the coalition began slowing this pace in October as market analysts predicted looming oversupply.
Despite these concerns, executives from several major European energy producers challenged predictions of a supply glut on Monday, citing rising demand and constrained production capacity.
Diverging Views on Market Outlook
U.S. Department of Energy Deputy Secretary James Danly added to the debate, stating he doesn’t anticipate an oil surplus emerging by 2026.
The OPEC+ decision to maintain current output levels came after Russia, facing Western sanctions that complicate export increases, advocated for the production pause according to four sources within the alliance.
In October, both the United States and Britain imposed sanctions targeting Russia’s two primary oil companies, Rosneft and Lukoil.
Market attention now turns to the latest U.S. inventory data from the American Petroleum Institute, due later Tuesday, for additional trading signals. A preliminary Reuters survey indicates U.S. crude stockpiles likely increased last week.
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