Oil Prices Start the Week Lower Amid Oversupply Fears
Oil prices fell sharply on Monday as traders braced for potential oversupply in 2025 and closely monitored developments in the Middle East ahead of OPEC+’s biannual meeting this Sunday.
Brent crude for January delivery dropped 2.87% to $73.01 per barrel, while West Texas Intermediate (WTI) crude for the same month fell 3.23% to $68.94.
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The market reacted to reports that Israel’s security cabinet is expected to vote Tuesday on a proposed ceasefire agreement with Hezbollah. U.S. officials suggested the deal is “close,” raising hopes of de-escalation in the conflict, which has seen intensified Israeli strikes on Hezbollah strongholds in Lebanon in recent days.
These developments have pressured oil prices, reflecting reduced risk premiums tied to regional instability.
Global Surplus and Other Concerns
Simultaneously, concerns about a global oil surplus are weighing on the market. Non-OPEC+ crude supply is projected to grow faster than demand in 2025, with an anticipated increase of about 1.1 million barrels per day, according to Kartik Selvaraju, an analyst at Rystad Energy.
Adding to the bearish sentiment, the recent nomination of Scott Bessent as Treasury Secretary in Donald Trump’s incoming administration has further impacted prices. Bessent has expressed strong support for increasing U.S. oil production by 3 million barrels per day, a stance viewed by the market as a potential driver of oversupply.
His pro-oil stance is undoubtedly a bearish factor. Bessent’s plans could amplify the challenges faced by the oil market in balancing supply and demand.
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