Oil prices fell on Tuesday as concerns about abundant supply outweighed worries over continued sanctions on Russian shipments, while peace talks aimed at ending the war in Ukraine showed no progress.
Brent crude dropped 33 cents, or 0.5%, to 63.04 dollars a barrel by 11:46 GMT. US West Texas Intermediate declined 32 cents, or 0.5%, to 58.52 dollars.
Both benchmarks had gained 1.3% on Monday, after growing doubts about reaching a peace agreement between Russia and Ukraine boosted expectations that constrained flows of sanctioned Russian crude and fuel would persist.
Despite market anxiety over Russian shipments, broader 2026 supply–demand projections point to a more oversupplied market, with multiple forecasts suggesting supply growth will outpace demand next year.
Priyanka Sachdeva, senior market analyst at Phillip Nova, said in a Tuesday note: “In the near term, the main risk lies in oversupply, and current price levels appear vulnerable to pressure.”
Amid new sanctions targeting Russia’s state-owned Rosneft and private producer Lukoil, along with rules banning refined products made from Russian crude from entering Europe, some Indian refiners — including private refiner Reliance — have reduced purchases of Russian oil.
With limited alternative buyers, Russia is seeking to expand shipments to China. Deputy Prime Minister Alexander Novak said Tuesday that Moscow and Beijing are discussing ways to increase Russian oil exports to China.
Giovanni Staunovo, analyst at UBS, noted: “Market participants are still assessing whether the latest European and US sanctions will meaningfully affect Russia’s oil exports.”
Even so, analysts are primarily focused on the risk of wider imbalances in supply and demand. Deutsche Bank projected a surplus of at least two million barrels per day in 2026, with no clear path back to deficit conditions before 2027, according to a Monday report.
“The trajectory into 2026 remains skewed to the downside,” said analyst Michael Shoh.
Expectations of a weaker market next year continue to outweigh the supportive effect of stalled peace negotiations, which had previously helped prices stabilize. A peace agreement could ultimately lift sanctions on Moscow, potentially releasing large volumes of previously constrained supply into the market.
However, oil continues to find some support from growing expectations that the Federal Reserve will cut interest rates at its December 9–10 policy meeting, after several Fed officials signaled openness to easing.
A rate cut could stimulate economic activity and strengthen oil demand.
“Oversupply concerns are pulling the market one way, while hopes of stronger demand driven by monetary easing are pulling it the other,” Sachdeva said.
