Crude Oil Under Pressure Amid Oversupply Outlook and U.S.–Russia Tensions

Oil prices extended losses on Friday, heading for a nearly 3% weekly decline as markets awaited the upcoming summit between U.S. President Donald Trump and Russian President Vladimir Putin in Hungary. The meeting could pave the way for a potential peace deal in Ukraine, reshaping the global energy outlook.

Oil Prices Fall on Supply Concerns and Geopolitical Uncertainty

Global oil prices slipped in early Asian trading on Friday (October 17), capping off a volatile week of declines. Investors remained cautious ahead of the highly anticipated meeting between U.S. President Donald Trump and Russian President Vladimir Putin, who are expected to discuss a potential resolution to the war in Ukraine.

As of 00:30 GMT, Brent crude dropped 0.13% to $60.98 a barrel, while U.S. West Texas Intermediate (WTI) futures fell 0.16% to $57.37 a barrel. Both benchmarks were down nearly 3% for the week, marking their steepest weekly drop in over two months.

Market Pressured by Oversupply Outlook

According to the International Energy Agency (IEA), the global oil market could face a significant oversupply by 2026, driven by slower demand growth and rising production from non-OPEC countries, particularly the United States. The report has weighed heavily on market sentiment this week, prompting investors to scale back bullish positions.

Data from the U.S. Energy Information Administration (EIA) also reinforced supply concerns. The agency reported that U.S. crude inventories rose by 3.5 million barrels to 423.8 million barrels last week — far exceeding analysts’ forecasts for a modest 288,000-barrel increase. The build was largely attributed to lower refinery utilization rates as facilities enter the autumn maintenance season, coupled with record-high production at 13.64 million barrels per day, the highest ever recorded.

Trump–Putin Meeting Could Shift Energy Market Dynamics

A key factor influencing sentiment this week was the announcement of an upcoming summit between Trump and Putin, expected to take place in Budapest, Hungary, within the next two weeks. The meeting aims to explore a potential peace framework for Ukraine, which could, in turn, ease global energy market tensions.

Analysts at ANZ Bank said the announcement has eased near-term supply concerns, noting that markets tend to react positively when geopolitical risks subside.

“The news of a potential Trump–Putin meeting has given traders reason to expect a more stable supply outlook,” said Daniel Hynes, Senior Commodity Strategist at ANZ.

However, the situation remains delicate. The planned summit comes as Ukraine is lobbying Washington for additional military support, including U.S.-made long-range Tomahawk missiles. Meanwhile, the U.S. continues to pressure India and China to reduce purchases of Russian oil, which could lead to fresh volatility in global energy flows.

Economic and Political Pressures Add to Volatility

Beyond geopolitics, broader economic signals have also weighed on crude prices. Recent data suggests slower global economic growth, particularly in China — the world’s second-largest oil consumer — raising doubts about the strength of future demand.

Additionally, uncertainty surrounding U.S. Federal Reserve policy continues to influence the market. While expectations for interest rate cuts later this year could eventually support oil prices, the strong U.S. dollar in the short term remains a drag on commodities priced in USD, including crude.

In the previous session, Brent closed 1.37% lower, while WTI fell 1.39%, marking their lowest settlements since May 5.

Market Outlook: Cautious Optimism Amid Uncertainty

Despite current headwinds, analysts believe that medium-term prospects remain constructive if the Federal Reserve adopts a more accommodative stance and geopolitical tensions ease.

According to Goldman Sachs, should negotiations between the U.S. and Russia lead to meaningful progress and oil exports from Moscow gradually normalize, Brent prices may stabilize around $65 per barrel in Q4 2025. However, if talks fail or hostilities intensify, prices could rebound sharply toward $75 per barrel on renewed supply concerns.

Frequently Asked Questions (FAQ)

1. Why did oil prices decline this week?
Prices fell due to rising U.S. crude inventories, concerns about global oversupply, and optimism that peace talks between the U.S. and Russia could ease geopolitical risks.

2. How might the Trump–Putin summit impact oil markets?
If progress is made toward ending the war in Ukraine, Russian oil exports could recover, putting downward pressure on prices. Conversely, renewed tensions could drive prices higher.

3. What is the current level of U.S. crude production?
U.S. output has reached a record-high 13.64 million barrels per day, adding to fears of a supply glut in global markets.

4. What is the oil price outlook for late 2025?
Analysts expect Brent crude to hover around $65–70 per barrel by the end of 2025 if the Fed cuts rates and geopolitical conditions stabilize.