Crude oil prices extended their losing streak to a fifth successive day amid increased fears around excess supply in the market.
Oil prices dropped for a fifth straight session on Tuesday as growing concerns around oversupply and low demand pushed markets lower. Following its longest losing run since early August, Brent crude traded near $66 a barrel, while West Texas Intermediate (WTI) hovered close to $62.
Already weak oil benchmarks experienced downward pressure after Iraq and the Kurdish regional government agreed to resume crude exports through Turkey. The restart ends a two-year stoppage caused by financial disputes, while potentially restoring about 230,000 barrels per day to global markets.
Both Brent and WTI have lost around 4% over the last five trading days, as traders brace for increased global production levels. Industry analysts say the extra barrels from Iraq will compound worries about oversupply just as demand forecasts remain uncertain.
Oversupply fears persist in oil markets
The International Energy Agency has warned that oil supply could exceed demand by a record margin in the next few years. Rising production from OPEC+ members and countries outside the group could lead to a fuel surplus that extends into 2026.
Current oversupply concerns outweigh geopolitical tensions, including risks linked to Russian exports and conflicts in the Middle East. For now, markets view oversupply as the main issue, while demand prospects appear unclear heading into the end of the year.
Meanwhile, Canadian Prime Minister Mark Carney has urged Western allies to impose secondary sanctions on Russia quickly, increasing pressure on President Vladimir Putin’s energy revenues. His comments follow US President Donald Trump’s push for Europe to stop buying Russian crude, although China remains unaffected by existing tariffs.
Reduced demand for oil set to continue
The broader oil market also faces ongoing demand issues as more countries begin to shift towards greater electric vehicle adoption, limiting longer-term consumption growth. Economic concerns, intensified by US tariffs, further cloud the outlook, adding to the negative momentum driving prices lower.
Preliminary data suggested US crude inventories rose last week, reinforcing expectations of rising stockpiles, while gasoline and distillate stocks showed small declines. Saudi Arabia’s July exports also dipped to their lowest level in four months, according to figures from the Joint Organisations Data Initiative.
Despite lower exports from Saudi Arabia, Iraq increased shipments under its OPEC+ quota, adding further to global supplies and dampening price sentiment. State oil marketer SOMO confirmed that Iraq remains committed to raising volumes under the group’s wider production agreement.
Going forward, the balance between supply growth and demand weakness is set to dominate market sentiment throughout the fourth quarter. With Brent and WTI under pressure, traders expect further volatility as oversupply fears come up against persistent geopolitical uncertainties.
Remember to stay updated with all the latest Market News at FXTrustScore.com.
