HOUSTON: Oil prices slipped on Tuesday as investors braced for a supply surplus due to potential OPEC+ plans for a larger output hike next month and the resumption of oil exports from Iraq’s Kurdistan region via Turkey.
Brent crude futures for November delivery, expiring on Tuesday, fell 94 cents, or 1.38%, to $67.03 a barrel by 11:15 a.m. EDT (1515 GMT). The more active December contract fell $1.11 or 1.65% to $65.98.
U.S. West Texas Intermediate crude was $62.35 a barrel, down $1.10, or 1.73%.
On Monday, Brent and WTI both settled more than 3% lower, their sharpest daily declines since August 1.
Oil prices drop more than 3% as OPEC+ plans for oil output hike
At its meeting next Sunday, OPEC+ is likely to consider a larger oil production increase of 411,000 barrels per day (bpd) for November, said two sources familiar with the talks.
A 411,000 bpd jump in November would be three times the 137,000 bpd increase that the Organization of the Petroleum Exporting Countries plus Russia and other allies had agreed for October.
“This (OPEC+) strategy could significantly squeeze margins for high-cost U.S. shale producers, potentially forcing them to scale back the record-level output they’ve maintained,” said StoneX analyst, Alex Hodes in a note on Tuesday.
Meanwhile, crude oil flowed on Saturday through a pipeline from the semi-autonomous Kurdistan region in northern Iraq to Turkey for the first time in two and a half years, after an interim deal broke a deadlock, Iraq’s oil ministry said.
The market has remained cautious in recent weeks, balancing supply risks, mainly arising from Ukraine’s drone attacks on Russian refineries, with expectations of oversupply and weak demand.
Elsewhere, U.S. President Donald Trump won Israeli Prime Minister Netanyahu’s support for a U.S.-backed Gaza peace proposal, but the stance of Hamas was uncertain.
In an ideal scenario, shipping traffic through the Suez Canal would return to normal following a Gaza peace deal, which would remove a significant portion of the geopolitical risk premium, PVM’s Varga said.
Adding to the bearish sentiment, the potential risk of a U.S. government shutdown has raised demand concerns, said ANZ analysts in a note on Tuesday.
The market awaits weekly oil stock data from the American Petroleum Institute, later on Tuesday.
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