Oil retreated as supply pressure builds and geopolitical signals remain uncertain

Oil prices eased for a second straight session on Tuesday as rising global supply overshadowed fragile geopolitical cues and deepening weakness in refined products.

Brent slipped 55 cents to $61.94 a barrel, while WTI fell 63 cents to $58.25.

The tone turned more cautious after Iraq restored production at Lukoil’s West Qurna-2 field, adding barrels at a time when seaborne inventories are already climbing. Crude-at-sea has risen by an estimated 2.5 million barrels per day since mid-August, amplifying expectations of faster onshore stock builds once the volumes discharge.

Refined products contributed to the bearish momentum. Gasoline and diesel cracks fell to their lowest levels since February, and systematic funds extended sales across the oil complex, eroding one of the market’s few recent pillars of support.

Geopolitical developments offered little offset. Ukraine is preparing a revised peace proposal for the US, prompting speculation about potential shifts to sanctions on Russian energy, though analysts cautioned that any discussions are unlikely to affect near-term supply. Meanwhile, the US and its allies are evaluating a move from the Russian crude price cap to a broader maritime services ban, a step seen as raising compliance risks but unlikely to curb export flows immediately.

The market now awaits monthly outlooks from the IEA, OPEC and the EIA. The IEA’s update on Wednesday is expected to reaffirm projections of a potential record surplus next year, which could see WTI test support between $56.80 and $57.50.

Macroeconomic sentiment is also in focus ahead of the US Federal Reserve’s policy decision. A 25-basis-point rate cut is largely priced in, though analysts see limited near-term influence on crude demand, with supply dynamics expected to remain the primary driver for prices.

Written by: Aiman Haikal