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Summary
- Oversupply concerns outweigh Russian sanctions’ impact on oil prices
- Russian oil exports to China discussed amid sanctions
- Deutsche Bank predicts 2026 oil surplus, bearish outlook
LONDON, Nov 25 (Reuters) – Oil prices eased on Tuesday as oversupply concerns outweighed worries that Russian shipments will remain under sanctions as talks to end the Ukraine war remain inconclusive.
Brent futures were down 33 cents, or 0.5%, at $63.04 a barrel by 1146 GMT. West Texas Intermediate (WTI) crude declined 32 cents, or 0.5%, to $58.52.
Both crude benchmarks gained 1.3% on Monday as rising doubts about a peace deal to end the Russia-Ukraine war reduced expectations for the unfettered flow of Russian crude and fuel supplies, which are under sanctions from Western nations.
Even as market participants worry about Russian shipments, the overall outlook for crude oil supply and demand balances in 2026 is looser amid numerous forecasts that supply growth will exceed demand increases next year.
“In the short term, the key risk is oversupply and current price levels seem vulnerable,” Priyanka Sachdeva, senior market analyst at Phillip Nova, said in a note on Tuesday.
Because of new sanctions on Russian oil majors Rosneft and Lukoil and rules against selling oil products refined from Russian crude to Europe, some Indian refiners have cut back their purchases of Russian oil, particularly private company Reliance.
With limited options for sales, Russia is looking to increase exports to China.
On Tuesday, Russian Deputy Prime Minister Alexander Novak said Moscow and Beijing have been discussing ways to expand Russian oil exports to China.
“Market participants still are trying to figure out if the latest European and U.S. sanctions will impact Russian oil exports or not,” UBS analyst Giovanni Staunovo said.
Overall though, market analysts remain focused on the potential for wider supply and demand imbalances.
Deutsche Bank sees a 2026 crude oil surplus of at least 2 million barrels per day and no clear path back to deficits even by 2027, the bank said in a note on Monday.
“The path forward into 2026 remains a bearish one,” analyst Michael Hsueh said.
The expectation for softer markets next year is outweighing the lack of a resolution on a Ukraine-Russia peace deal, which supported prices. A deal could lead to sanctions being lifted on Moscow, unleashing previously restricted oil supplies into the market.
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