(RTTNews) – Crude oil fell sharply on Tuesday as concerns over oversupply outweighed the positivity from OPEC’s surprise decision to freeze production growth for the first quarter of 2026.
WTI crude oil for December delivery was last seen trading at $60.61 per barrel, down $0.44 (or 0.72%).
On Sunday, after a virtual meeting among its member countries, the OPEC+ alliance agreed to implement a production increase of 137,000 barrels per day in December.
Additionally, the alliance decided to halt production growth in January, February and March 2026, contrary to market expectations.
OPEC cited “seasonality” and historically weak demand in the first quarter of any year as the reason behind its decision. However, OPEC+’s decision was also driven by oversupply concerns and the International Energy Agency’s report last month of slower demand growth for 2025 and 2026. The IEA had forecast a surplus of about 4 million barrels per day next year.
The OPEC+ alliance has collectively increased its quota by 2.9 million barrels per day so far this year, about 50% of the oil group’s total 5.85 million bpd voluntary cuts. However, the cartel increased production by only 70–75% of its respective target.
Last month, the US imposed sanctions on Russia’s two largest oil corporations, Rosneft and Lukoil, in a bid to force a ceasefire agreement with Ukraine.
Earlier, US President Donald Trump had threatened to impose “punitive tariffs” on countries buying Russian oil. To avoid incurring Trump’s wrath, major buyers of Russian oil, China, India and Turkey, have already started looking for alternative suppliers.
In the ongoing Russia–Ukraine war, Ukraine has been targeting oil and energy installations in Russia and carrying out sustained attacks on them, destroying refineries and resulting in a decline in Russian crude oil deliveries.
Recently, the strengthening of the US dollar has also increased pressure on oil prices.
Traders interpreted the decision by OPEC to halt production increases as an acknowledgment of a possible oversupply situation in the near term. So far, OPEC has ignored concerns about excess oil flooding the market.
The government shutdown in America, which started on October 1, entered its 35th day today.
The US Federal Reserve and markets are now left to focus only on private data for clues on the economy as the shutdown has blocked the release of official reports.
The Fed has made two rate cuts this year. Fed officials are divided over whether to make another rate cut at the upcoming Dec. 9-10 meeting.
Analysts believe that since crude oil is a dollar-denominated commodity, the Fed’s decision could impact the US dollar and this could impact oil prices in the short term.
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