Oil slips on oversupply worries as investors watch Ukraine negotiations

Oil prices edged lower on Tuesday as concerns about a growing supply glut outweighed lingering fears that Russian exports could remain constrained while Ukraine peace talks show little progress.
Brent crude fell 33 cents, or 0.5%, to $63.04 a barrel at 1146 GMT, while U.S. West Texas Intermediate (WTI) dropped 32 cents, or 0.5%, to $58.52. Both benchmarks had risen 1.3% on Monday amid doubts that a Russia-Ukraine peace agreement would materialize, reducing expectations of unrestricted Russian crude and product flows under Western sanctions.
Despite uncertainty over Russian shipments, analysts say the global supply-demand balance looks increasingly loose for 2026, with forecasts suggesting supply growth will outpace demand.
“In the short term, oversupply remains the key risk, and current prices appear vulnerable,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
New sanctions on Rosneft and Lukoil — and bans on selling fuel made from Russian crude into Europe — have pushed some Indian refiners, including Reliance, to scale back purchases. With fewer buyers, Russia is pivoting toward China. Deputy Prime Minister Alexander Novak said on Tuesday that Moscow and Beijing are discussing ways to expand Russian oil exports.
“Markets are still assessing whether the latest European and U.S. sanctions will meaningfully curtail Russian oil exports,” UBS analyst Giovanni Staunovo noted.
Analysts remain focused on the widening mismatch between supply and demand. Deutsche Bank expects a surplus of at least 2 million barrels per day in 2026, with no clear return to deficit even by 2027.
“The outlook for 2026 is decidedly bearish,” said analyst Michael Hsueh.
Expectations of a softer market next year are overshadowing the lack of progress on Ukraine peace efforts, which had previously lent some support to prices. A peace deal could pave the way for sanctions relief and allow restricted Russian supplies to re-enter the global market.
Oil prices are finding some support from growing expectations of a U.S. interest rate cut at the Federal Reserve’s December 9–10 meeting, as policymakers signal openness to easier monetary policy. Lower rates could boost economic activity and lift oil demand.
“The oil market is in a tug-of-war between an oversupplied landscape and hopes that easier monetary policy will support demand,” Sachdeva added.