oil markets under pressure from rising output and ukraine peace signals

Global oil prices fell around 2% as markets reacted to growing concerns over a looming supply glut, while renewed optimism about a possible peace deal between Russia and Ukraine added further downward pressure on crude.

Brent crude futures dropped more than 2% to trade near the low $60-per-barrel range, while U.S. West Texas Intermediate (WTI) crude also declined sharply, slipping below the $57 mark. The losses reflected increasing bearish sentiment among investors, who fear that global oil supply could significantly outpace demand in the coming months.

Market participants remain focused on forecasts from energy agencies that point to rising output from both OPEC+ and non-OPEC producers. The International Energy Agency has warned that global supply growth is expected to exceed demand growth next year, driven by higher production from the United States, Brazil, and Guyana. This has fuelled expectations of a supply surplus, weighing heavily on prices.

Adding to the pressure were hopes of progress toward a peace agreement between Ukraine and Russia. Diplomatic signals suggesting renewed talks raised the prospect that sanctions on Russian oil exports could eventually be eased. Any return of larger volumes of Russian crude to global markets would further swell supply, amplifying concerns about oversupply.

Analysts said the combination of supply-side risks and easing geopolitical tensions has reduced the risk premium that had previously supported oil prices. While conflicts in the Middle East and disruptions in shipping routes continue to pose potential risks, markets appear increasingly focused on fundamentals rather than geopolitical uncertainty.

Oil prices have struggled in recent weeks despite intermittent rebounds, as weak demand growth in major economies such as China and Europe has also dampened sentiment. Slower industrial activity and cautious consumer spending have limited fuel consumption, reinforcing fears that demand may not be strong enough to absorb rising production.

Looking ahead, investors are expected to closely monitor upcoming OPEC+ policy signals, inventory data, and developments related to Ukraine peace negotiations. Any indication of deeper production cuts could offer some support to prices, but analysts warn that without clear signs of stronger demand, oil markets are likely to remain under pressure.