Oil Prices Stabilize After Recent Losses Amid Supply Surge and Demand Concerns

Oil prices were mostly unchanged in Asian trading on Tuesday, finding some stability after steep losses driven by mounting concerns over a supply glut and weakening global demand.

Both Brent crude and WTI hovered near one-week lows, weighed down by signs of increasing production from OPEC+ and deteriorating macroeconomic data from the U.S. and China—two of the world’s largest oil consumers.

Brent, WTI Hover Near One-Week Lows

As of 21:23 ET (01:23 GMT), Brent crude futures for September edged down 0.1% to $68.72 per barrel, while West Texas Intermediate (WTI) futures also dipped 0.1% to $65.23 per barrel.

This stability followed a sharp drop in prices over recent days, with oil markets rattled by persistent oversupply fears.

OPEC+ Output Hikes Add Pressure

Oil markets were jolted over the weekend when OPEC+—the coalition of oil producers led by Saudi Arabia and Russia—announced a second consecutive monthly production increase, adding 547,000 barrels per day to global supply.

This move is part of the group’s ongoing effort to reverse pandemic-era output cuts and regain global market share, but it arrives at a time when demand appears to be faltering.

Demand Worries Deepen with Weak U.S. and China Data

Demand concerns were amplified by disappointing U.S. nonfarm payroll data, which pointed to slowing job growth and increased uncertainty about the health of the world’s largest economy. This raised fears of declining fuel consumption in the U.S.

Meanwhile, China—the world’s top oil importer—posted weaker-than-expected PMI data, showing a deeper contraction in manufacturing activity, further souring demand prospects.

The combination of soft data from both countries has exacerbated market fears of a global economic slowdown, undercutting support for crude prices.

U.S. Sanction Threats Offer Limited Support

While oil prices did get a brief lift last week, it was largely due to geopolitical tensions, as former President Donald Trump threatened to expand sanctions on Russian oil buyers amid the ongoing war in Ukraine.

Trump warned of penalties against major importers like China and India, and imposed a 25% tariff on Indian imports, signaling potential escalation if India continues purchasing Russian crude.

Although these threats could tighten global supply in the long term, they have so far provided only limited upside to oil prices, especially amid broader macroeconomic headwinds.

Dollar Strength Weighs on Crude

A stronger U.S. dollar added further pressure, making oil more expensive for buyers using other currencies. However, this impact was somewhat balanced by the recent string of weak U.S. economic data, which has increased speculation around potential rate cuts by the Federal Reserve.

Outlook: Fragile Balance Between Supply and Demand

Oil markets remain stuck in a fragile equilibrium, caught between the push of rising supply and the pull of deteriorating demand. While geopolitical risks could limit future output, the near-term outlook remains clouded by economic uncertainty in major consumer economies and ongoing currency fluctuations.