Key Points
- Oil prices are steady as the market balances fears of a surplus with the impact of sanctions on Russia.
- The price of Russian crude has hit a two-year low ahead of new U.S. sanctions.
- Benchmark oil futures are down for the year due to expectations of a record oversupply in 2026.
- Geopolitical tensions, including the situation in Venezuela, are providing some support to oil prices.
Oil prices held steady as investors tried to balance the impact of an emerging oversupply with the effects of U.S. sanctions on Russia, which have already disrupted some crude oil flows.
Brent crude traded near $64 a barrel after a slight drop in the previous session. The price of Russia’s main crude oil has fallen to its lowest level in over two years. This comes just days before U.S. sanctions are set to hit major Russian producers Rosneft and Lukoil. In response, major Asian buyers have already paused some of their purchases.
Overall, oil futures are down for the year. This is largely due to expectations of a glut, with the International Energy Agency (IEA) forecasting a record surplus in 2026. The oversupply is being caused by the return of previously idled production from OPEC and its allies, as well as increased production from countries outside the group.
Adding to the market’s uncertainty, U.S. President Donald Trump said on Monday that he hasn’t ruled out sending troops into Venezuela. However, he is also willing to talk with the country’s leader, Nicolas Maduro. The U.S. has increased its military presence near the OPEC nation in recent weeks.
“Despite the weak sentiment across financial markets, the oil market remains supported by geopolitical uncertainty and sanctions,” said Arne Lohmann Rasmussen, chief analyst at A/S Global Risk Management.
One area of strength in the market is diesel. Diesel prices have been on the rise, with market indicators on Tuesday pointing to tight supplies of the fuel in Europe.
