Oil prices slipped on Tuesday as investors interpreted OPEC+’s decision to freeze output growth in the first quarter of next year as a warning sign of potential oversupply in the global market.
Brent crude oil, the international benchmark for Nigeria, declined by 37 cents, or 0.6% to $64.52 a barrel by 08:00 a.m., while U.S. West Texas Intermediate (WTI) crude also dropped 37 cents, or 0.6% to $60.68 a barrel.
The losses followed OPEC+’s weekend announcement that it would pause further production increases after months of steady expansion.
The Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, said it would proceed with a modest output increase for December but maintain production levels through the first quarter of next year.
Since April, the group has raised its output targets by about 2.9 million barrels per day, equivalent to roughly 2.7% of global supply, but began slowing the pace of increases in October amid mounting concerns over a potential supply glut.
According to Suvro Sarkar, energy sector team lead at DBS Bank, the latest move marks a shift in tone from the producers’ alliance.
“The market may see this as the first sign of acknowledgement of potential oversupply from the OPEC+ front, who have so far remained very bullish on demand trends and the market’s ability to absorb extra barrels,” Sarkar said.
The decision to pause additional hikes comes as global forecasts diverge sharply on the outlook for oil supply and demand in 2025. Several executives from Europe’s largest energy companies disputed suggestions of an impending glut, citing resilient demand and easing production growth in some regions.
Meanwhile, U.S. Deputy Energy Secretary James Danly told reporters he does not expect an oil glut in 2026, noting that global consumption remains robust.
Industry sources disclosed that Russia was among the strongest advocates for pausing production hikes, as Western sanctions have constrained its export capacity.
In October, the United States and the United Kingdom imposed sanctions on Rosneft and Lukoil, Russia’s two biggest oil firms, limiting their access to global markets and trade financing.
Analysts at J.P. Morgan said in a note that while geopolitical risks and sanctions have intensified, the measures are unlikely to completely disrupt Russian oil operations.
“Our oil strategists maintain that, although the risk of disruption has increased, the sanctions by the U.S., UK, and EU will not prevent Russian oil producers from operating,” the bank noted.
Despite the current weakness in prices, some market participants believe the sanctions could still provide near-term support by constraining supply from Russia and tightening trade flows.
Independent analyst Tina Teng said, “The measures could limit export volumes and offset some of the oversupply fears in the short term.”
Traders are now awaiting the latest U.S. inventory data from the American Petroleum Institute (API) for direction. A preliminary Reuters poll indicated that U.S. crude stockpiles likely rose last week, which, if confirmed, could reinforce bearish sentiment.
While OPEC+’s decision aims to stabilize the market, the move has highlighted a shifting dynamic in global energy policy — from aggressive output expansion toward cautious supply management. With Brent holding below $65 and investors wary of weakening demand, the market’s response underscores renewed skepticism about the balance between economic recovery, production growth, and geopolitical uncertainty heading into 2025.