Oil prices fall as global supply outweighs sanctions pressure

SINGAPORE: Oil markets slipped on Friday, with both Brent and US crude retreating as supply growth from major producers outpaced the effects of sanctions on Russian exports. The losses extend a downward trend, pushing prices toward a third consecutive monthly decline.

Brent crude closed at $64.67 a barrel, down 33 cents, while West Texas Intermediate (WTI) fell 35 cents to $60.22 a barrel. Analysts said a stronger US dollar has dampened demand across commodities, making it harder for oil to gain momentum.

“The recent strength in the dollar has reduced buying interest in oil,” said ANZ analysts. The greenback rose after Federal Reserve Chair Jerome Powell indicated that a rate cut in December is not guaranteed, boosting investor confidence in the currency.

Market watchers say rising supply is also keeping prices under pressure. OPEC and allied producers have been steadily increasing output in recent months to capture a larger share of the market, while US crude production hit record highs last week. Saudi Arabia, the world’s top exporter, shipped 6.4 million barrels per day in August, its highest level in six months, according to JODI data.

OPEC+ is expected to approve a modest increase in output in December, sources close to the group said. The eight OPEC+ members have already raised production targets by more than 2.7 million barrels per day over recent months, equal to roughly 2.5 percent of global supply.

Meanwhile, international trade developments have added a note of optimism. US President Donald Trump announced that China has agreed to start buying energy from the United States, including oil and gas from Alaska. Experts remain cautious, however, saying the impact is likely to be limited.

“Alaska accounts for just 3 percent of total US crude output,” said Barclays analyst Michael McLean. “Any Chinese purchases are unlikely to significantly affect global oil markets.”

With supply increasing and demand growth remaining moderate, analysts predict that oil prices may face continued pressure in the coming weeks.