- Crude oil prices remain under pressure amid increased supply and reduced global demand.
- Increased output from OPEC+, Alaska, and potentially a new peace deal with Russia, pose a threat to more decline.
- Markets await key US macroeconomic data to gauge short-term volatility in oil prices.
Crude oil futures remain under pressure as WTI stays below $60.00 mark, slightly up from Wednesday’s close. However, the broader sentiment remains bearish as traders react to the reports that the US is endeavoring to broker a new peace deal with Russia. This could reshape the global oil supply.
Even though the proposal appears beneficial for Moscow and unlikely to be endorsed by Ukraine, the fear of sanctions has eased slightly. If the proposal is implemented and previously restricted Russian oil enters the market, the markets could experience a strong sell-off, potentially pushing prices to $50 in the coming months. This is happening despite US inventory data showing solid fundamentals, with commercial stock falling 3.43 million barrels last week amid higher exports and firm margins.
The structural supply dynamics are also shaping the market expectations. The US EIA now forecasts Alaska’s crude oil production to surge to 477k barrels per day, the most significant annual rise since the 1980s. According to data from the Alaska Oil and Gas Conservation Commission, the new wells are producing far above the regional average, prompting the EIA to revise its forecast.
Global flows also shifted as Azerbaijan’s oil export to Germany in 2025 saw a 9.3% rise in volume. Total crude and petroleum exports reached 2,075 million tons, worth nearly $11 billion, revealing a margin-pressured trade performance.
A key theme undermining the sentiment is the revival of the refining loophole, which allows Russian oil to be processed in India and resold globally. According to CREA, New Zealand has purchased refined products worth $100 million in the past year, generating $70 million in tax revenue for Russia. The shipments have raised concerns about the potential for political and ethical scrutiny regarding whether the sanctions are effectively enforced.
On the other hand, Saudi Arabia raised its crude output by 244k bpd to 29-month highs as OPEC+ pushed the unwinding of voluntary cuts. Exports gained for the second consecutive month, staying above the 5-year average. The OPEC+ group has approved a modest output hike for December and plans to halt further increases in early 2026.
Markets are bracing for the US NFP data for September today. A stronger dollar could further pressure crude oil and push it towards weekly lows near $57.00.