By: Economy Middle east

Oil prices edged lower on Tuesday, as investors balanced recent gains from escalating Russia-Ukraine tensions against persistent global oversupply fears. Brent crude slipped toward $61.50 per barrel while West Texas Intermediate hovered near $58, reflecting caution after a 2 percent surge the prior day. 

Russia-Ukraine frictions intensified investor focus, with President Vladimir Putin signaling a tougher negotiating stance after alleged Ukrainian drone strikes near his residence, dimming U.S.-led peace efforts. Ukrainian President Volodymyr Zelenskiy expressed readiness for a U.S.-backed framework earlier in December, but stalled talks raised supply disruption risks, propping up a $3 per barrel geopolitical premium. Markets now price in prolonged conflict, potentially curbing Russian refinery output amid Ukrainian attacks and Western sanctions. 

Brent crude traded at $61.98 early Tuesday, down slightly from Monday’s 2 percent climb to $61.86, while WTI held at $58.11 after rising to $57.96. Earlier optimism over U.S.-brokered deals in late November drove Brent to five-week lows of $61.70 and WTI to $57.72, as hopes of sanction relief threatened to flood markets with Russian supply. By late December, Yemen flare-ups and failed breakthroughs reversed course, with WTI soaring 2.5 percent to $58.17 on supply worries. 

Oversupply looms despite OPEC+ caution

OPEC+ stuck to its Q1 2026 production pause after November decisions, countering weak demand but facing Russian export surges if peace materializes. U.S. inventories rose unexpectedly for the week ending December 19, adding bearish pressure amid China’s strong imports yet global glut signals. Analysts foresee bearish momentum if sanctions ease, with Brent down over 20 percent year-to-date on oversupply themes. 

President Donald Trump’s warnings of strikes on Iran’s nuclear program amplified Middle East risks, overlapping Ukraine woes and Yemen instability. Russian pipeline flows to Europe, already curtailed by sanctions since 2022, face further threats, redirecting crude to Asia and pressuring prices. EU embargoes since December 2022 slashed seaborne imports by 90 percent, but shadow fleet maneuvers sustain exports, complicating market balances.