Crude dips in Asia trade as supply concerns overshadow U.S. political developments

SINGAPORE: Oil prices dipped slightly in Asian trading on Tuesday, as mounting fears of an oversupply outweighed optimism about progress in Washington and uncertainty surrounding new US sanctions on Russian oil companies.

By 4:26 a.m. GMT, Brent crude was down 12 cents (0.2%) at $63.94 a barrel, while US West Texas Intermediate (WTI) slipped 14 cents (0.2%) to $59.99. Both benchmarks had gained around 40 cents in the previous session.

Markets initially found some comfort in signs that the US government shutdown — the longest in history — might soon end. The Senate approved a funding compromise, and House Speaker Mike Johnson said he hoped to pass it as early as Wednesday.

However, that bit of good news wasn’t enough to lift oil prices, as traders grew increasingly worried about an oversupplied market.

“As OPEC production increases grind on, global oil balances are taking on a bearish tone,” analysts at Ritterbusch and Associates wrote, pointing to weaker demand and slower economic growth in major oil-consuming countries.

Earlier this month, OPEC+ agreed to raise its output target by 137,000 barrels per day in December — the same pace as in recent months — but plans to pause any further rises in early 2026.

At the same time, US sanctions on Russia’s Rosneft and Lukoil are shaking up global supply chains. According to Reuters, Lukoil has declared force majeure at one of its oil fields in Iraq, and Bulgaria is preparing to seize its Burgas refinery — the biggest fallout so far from Washington’s latest measures.

Meanwhile, the amount of oil stored on tankers in Asian waters has doubled in recent weeks, as tougher Western sanctions slow Russian exports to China and India. With import quotas tightening, some Asian refiners have turned to the Middle East and other regions for their supplies.

Still, analysts say there are unanswered questions about how major buyers will react.

The big unknown, according to Ritterbusch, is how aggressively China will continue stockpiling Russian oil — and whether India will respond to US pressure to buy less.

For now, while a potential end to the US shutdown may lift overall market sentiment, the oil market remains under pressure — weighed down by rising supply, weakening demand, and geopolitical uncertainty.