Global Oil is Nervous!
Global oil prices fell slightly as the market was clouded by two conflicting concerns: the threat of a supply surplus and new US sanctions against Russia. Brent was trading below USD 64 per barrel, while West Texas Intermediate (WTI) hovered near USD 59 per barrel. The price of Russia's main oil 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 some of their export flows.
Trendingly, oil futures contracts have been trending lower this year as the market anticipates a supply glut. The International Energy Agency (IEA) projects a record surplus in 2026, driven by the resumption of production cut by OPEC+ and increased supply from countries outside the cartel. Energy analyst Saul Kavonic of MST Marquee said the market is currently weighing a bearish balance sheet outlook against the risk of geopolitical supply disruptions from Russia and other regions. If sanctions enforcement is relaxed, conflicts do not escalate, and OPEC remains on its current path, he believes oil prices could potentially weaken further.
On the supply side, Canadian oil sands production continues to climb as the completion of the Trans Mountain pipeline expansion opens a wider route to Asian markets after years of capacity constraints. Production hit a record high in June and is expected to rise to around 6 million barrels per day by 2030, according to the Bank of Montreal. In midday trading in Singapore, Brent crude for January was down around 0.7% at USD 63.76 per barrel, while WTI crude for December weakened 0.7% to USD 59.50 per barrel. WTI's time structure remains slightly in backwardation, having briefly reversed into a contango pattern last week, which typically signals market oversupply.
While the pressure from the surplus is strong, several geopolitical risks could potentially prevent further price declines. In Africa, attacks in Sudan disrupted exports, while Iran seized an oil tanker near the crucial Strait of Hormuz, one of the world's busiest oil routes. 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 talk of expanding military operations to Colombia and even Mexico. Separately, Saudi Crown Prince Mohammed bin Salman is scheduled to meet with Trump in Washington to deepen cooperation, including the planned sale of F-35 fighter jets, affirming Saudi Arabia's position as a US "great ally" in the strategic energy region of the Middle East. (Asd)
Source: Newsmaker.id
