Key Points
- Oil prices are on track for a second straight weekly decline. The main reason for the drop is a growing fear of a global oversupply of crude.
- The market is shrugging off rising geopolitical risks, including recent attacks on Russian oil tankers.
- Major oil traders are predicting a surplus in early 2026, with some expecting prices in the $50s.
- Oil has lost about 20% of its value this year due to higher-than-expected production and weak demand.
Oil prices are heading for another weekly loss as concerns about a growing global crude glut overshadow rising geopolitical risks to supply.
Brent crude, the international benchmark, was trading near $60 a barrel on Friday but was still down about 2% for the week. West Texas Intermediate, the U.S. benchmark, was near $56. The drop comes even as Ukraine reportedly attacked another Russian oil tanker, the latest in a series of strikes that could disrupt Moscow’s oil exports.
Despite these growing tensions, the market’s main focus is on oversupply. Nearly all of the world’s biggest oil traders are predicting a surplus early next year.
One of the industry’s heaviest hitters, Trafigura Group, expects Brent to trade in the $50s for the first half of 2026. “The dominant sentiment right now is definitely a structural surplus,” said Haris Khurshid, a chief investment officer.
So far this year, oil has lost about a fifth of its value. This is because OPEC+ has been putting more barrels back on the market than expected, and other countries have also ramped up production. At the same time, global demand has been weaker than anticipated.
While geopolitical risks in countries such as Russia and Venezuela have helped prevent an even bigger price crash, the fear of a growing glut is currently the market’s biggest driver.
