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Prices Edge Lower After Recent Gains
Oil prices slipped on Tuesday, consolidating after modest advances last week driven by concerns over potential disruptions to Russian supply. At 04:50 ET (08:50 GMT), Brent crude futures for November delivery fell 0.5% to $67.08 per barrel, while West Texas Intermediate (WTI) crude declined 0.5% to $62.98 per barrel.
Geopolitical Tensions in Focus
Renewed geopolitical risks have provided near-term support to oil markets. Ukraine has intensified strikes against Russian oil facilities, including key export hubs, in a bid to weaken Moscow’s war funding. These attacks raised fears of potential disruptions to Russian supply, particularly for major buyers such as India and China.
Meanwhile, U.S. leadership has increased pressure for broader sanctions. Washington has already imposed steep tariffs on India and is calling for NATO, the EU, and G7 nations to escalate trade restrictions on Russian oil. Such moves could tighten global supply if major buyers reduce imports.
Oversupply Risks Weigh on Market
Despite supply fears, the broader outlook points to oversupply. OPEC and non-OPEC producers continue to lift output, while Chinese demand remains sluggish and U.S. consumption is expected to cool with the end of the summer travel season.
Analysts warn that Brent could slip toward $60 per barrel if production outpaces demand, with estimates of a potential surplus of 1.9 million barrels per day in the current quarter. The only significant upside risk for prices may come from stricter sanctions on Russia.
Fed Rate Cut Expectations Support Oil
A softer U.S. dollar has provided some support, as expectations build that the Federal Reserve will cut interest rates this week. Markets are pricing in a near-certainty of a 25 basis point reduction, with some bets on a larger move.
Lower borrowing costs could stimulate economic activity and, in turn, bolster demand for oil. However, persistent inflation risks cloud the Fed’s longer-term policy outlook, leaving oil markets cautious.
