Global oil oversupply deepens, prices drop
Oil prices are facing renewed downward pressure this week, with ICE Brent crude falling below $62 per barrel, marking its lowest level since late October. The global oil market continues to slide deeper into oversupply territory. ING’s latest outlook suggests further price pressure is likely as we move into 2026. However, Russian oil supply remains a key risk. While Russian seaborne exports are holding up, these barrels are struggling to find buyers, note ING commodity strategists Ewa Manthey and Warren Patterson.
“We’re seeing increasing volumes of Russian oil floating at sea. Clearly, this is unsustainable,” ING analysts said. “We need steeper discounts on Urals crude to attract buyers and/or ensure Russian buyers are not dealing with sanctioned entities. If these efforts fail, Russian oil output may begin to decline.”
ING’s base case remains that Russia will find ways to circumvent the latest sanctions imposed by the United States. Russia has shown resilience in maintaining oil flows since 2022, despite sanctions, embargoes, and drone attacks.
The American Petroleum Institute (API) reported a supportive crude draw of 4.8 million barrels last week—far exceeding market expectations of a 1.3 million barrel decline. However, refined products saw significant stock builds: gasoline inventories rose by 7 million barrels, and distillates by 1 million barrels.
If confirmed by the Energy Information Administration (EIA) later today, this would mark the largest gasoline build since late December 2024.
The EIA’s latest Short-Term Energy Outlook estimates that crude oil production in the United States will reach a record high of 13.61 million barrels per day in 2025, slightly up from the previous estimate of 13.59 million.
However, production is expected to come under pressure in 2026 due to the low price environment and slowing drilling activity. The agency now forecasts output to fall to 13.53 million barrels per day next year, down from the previous estimate of 13.58 million.