Global Oil Flood vs. Russian Sanctions!
Oil prices are stable as market participants weigh the potential impact of a global supply surplus stemming from new US sanctions on Russia. West Texas Intermediate (WTI) is trading below USD 60 per barrel after weakening slightly in the previous session, while Brent is hovering near USD 64 per barrel. The Russian benchmark oil price fell to its lowest level in more than two years, just days before US sanctions against energy giants Rosneft PJSC and Lukoil PJSC took effect, disrupting their oil exports.
Overall, oil futures prices have been under pressure this year as the market anticipates a supply glut. The International Energy Agency (IEA) forecasts a record surplus in 2026, driven by the resumption of production previously halted by OPEC and its allies, as well as additional output from producing countries outside the cartel. This expectation of a supply glut is keeping medium- to long-term sentiment bearish for oil prices.
On the supply side, Canadian oil sands production continues to increase. The expansion of the Trans Mountain pipeline will allow more Canadian oil to flow to Asian markets after years of infrastructure capacity constraints. Production hit a record high in June and is projected to continue rising to around 6 million barrels per day by 2030, according to the Bank of Montreal.
However, several geopolitical risks could prevent further price declines. In Africa, attacks in Sudan have disrupted exports, while Iran seized an oil tanker near the vital Strait of Hormuz. The market is also monitoring US pressure on Venezuela, including plans to designate the drug cartel allegedly led by President Nicolas Maduro as a foreign terrorist organization, and President Donald Trump's statement that he did not rule out the possibility of deploying troops to the oil-rich country. At 8:18 a.m. Singapore time, the December WTI contract was down 0.3% at USD 59.76 per barrel, while the January Brent contract fell 0.3% to USD 64.20 per barrel. (asd)
Source: Bloomberg.com
