Oil prices experienced a slight decline on Tuesday following the Organization of the Petroleum Exporting Countries and its allies, OPEC+, decision to pause output hikes in the first quarter of next year. This move is seen as a signal of potential oversupply in the market. As a result, Brent crude futures fell by 15 cents, or 0.2%, to $64.74 a barrel, while U.S. West Texas Intermediate crude decreased by 14 cents, or 0.2%, to $60.91 a barrel. The OPEC Basket price also dropped by 0.26 cents, or 0.39%, to $66.72 per barrel.
The OPEC+ agreement, reached on Sunday, includes a small oil output increase for December, followed by a pause in increases in the first quarter of 2025. This decision comes after OPEC+ raised output targets by around 2.9 million barrels per day, or approximately 2.7% of global supply, since April. However, the pace of these increases slowed down in October due to predictions of oversupply.
Despite these forecasts, the heads of some of Europe’s largest energy producers have challenged the notion of an oil supply glut in 2025, citing increasing demand and easing production. The U.S. Department of Energy’s deputy secretary, James Danly, also expressed skepticism about the possibility of an oil glut in 2026.
The decision by OPEC+ to maintain steady output targets was reportedly influenced by Russia’s lobbying efforts, as the country would struggle to increase exports due to Western sanctions. In October, the U.S. and Britain imposed sanctions on Russia’s two major oil companies, Rosneft and Lukoil.
Market participants are now awaiting the release of the latest U.S. inventory data from the American Petroleum Institute (API), which is expected to provide further trading cues. A preliminary Reuters poll suggests that U.S. crude oil stockpiles are likely to have risen last week. The outcome of this data release will be closely watched, as it may impact oil prices and the overall market trend.
The OPEC+ decision to pause output hikes reflects the complex dynamics of the global oil market, where supply and demand are influenced by a range of factors, including geopolitical tensions, economic trends, and environmental concerns. As the energy landscape continues to evolve, market players will be closely monitoring developments and adjusting their strategies accordingly.