Oil prices edged lower on Tuesday as concerns that global supply will outpace demand in 2026 outweighed renewed attention on Russian crude sanctions and the stalled diplomatic efforts to resolve the Russia–Ukraine conflict.
Brent crude oil, the international benchmark for Nigerian oil, slipped 0.4% to $63.10 per barrel at 06:00 a.m. in Nigeria, while West Texas Intermediate (WTI) declined 0.4% to $58.61.
The pullback followed a 1.3% gain on Monday driven by rising doubts over a peace deal that could determine whether restricted Russian supplies return to global markets.
Despite sanctions remaining in place, analysts say the broader fundamentals point to a weaker market next year.
Forecasts from multiple institutions indicate that oil supply growth will exceed demand increases in 2026, creating a looser balance and pressuring prices in the short to medium term.
Phillip Nova Senior Market Analyst, Priyanka Sachdeva, noted that oversupply concerns remain the dominant risk.
“In the short term, the key risk is oversupply and current price levels seem vulnerable,” she said.
New sanctions targeting Russian oil majors Rosneft and Lukoil, alongside restrictions on selling products refined from Russian crude to Europe, have already reduced purchases from some Indian refiners.
In response, Russia is seeking to deepen crude sales to China. Deputy Prime Minister Alexander Novak told the China–Russia Business Forum in Beijing that both countries are exploring ways to expand energy trade, including higher oil exports.
However, projections for a supply-demand imbalance continue to dominate market sentiment.
Deutsche Bank expects a crude surplus of at least 2 million barrels per day in 2026 with no clear pathway back to deficits even through 2027.
“The path forward into 2026 remains a bearish one,” Deutsche Bank’s Michael Hsueh said, highlighting expectations that supply additions will consistently outpace consumption growth.
While the absence of progress in Russia–Ukraine peace negotiations limits the immediate likelihood of sanctions being lifted, analysts note that the possibility of restricted Russian barrels re-entering the global market remains a key variable should a deal eventually be reached.
Oil prices are finding limited support from increasing expectations that the U.S. Federal Reserve will cut interest rates at its December 9–10 policy meeting.
Several Fed officials have signalled readiness to ease policy, which could stimulate economic growth and oil demand.
“The oil market is in a tug-of-war between a caution-driven supply overhang and demand hopes predicated on easier monetary policy,” Sachdeva added.
With oversupply projections building and geopolitical risks offering only temporary relief, traders remain cautious as global crude markets navigate a bearish transition into 2026.