By: Economy Middle east

Oil prices climbed modestly on Wednesday after reaching one-month lows in the previous session, reflecting a cautious market balancing between expectations of increased supply and hopes for a political resolution in Eastern Europe. Brent crude futures rose by about 23 cents or 0.37 percent to settle near $62.03 per barrel, while U.S. West Texas Intermediate (WTI) crude increased by 3 cents, or 0.05 percent, to around $58.14 per barrel in early trading.

The modest price recovery came against the backdrop of an ongoing global supply glut that has pressed oil prices downward over recent months. Market analysts have pointed to rising production from key oil-exporting nations, including OPEC+ member countries, which have incrementally raised output targets throughout 2025. This surge in supply has outpaced sluggish demand growth, resulting in an estimated oil surplus of about 2.7 million barrels per day in the third quarter of 2025. The oversupply is further evidenced by a spike in unsold crude cargoes in the Middle East and a growing amount of oil stored in tankers at sea, signaling that producers are facing challenges in finding immediate buyers.

Peace talks bring hope amid supply concerns

Despite the bearish supply outlook, traders found some solace in signals that peace talks between Ukraine and Russia are progressing. U.S. President Donald Trump affirmed that only a few remaining points remain to be resolved in the negotiations, with ongoing discussions in Geneva laying a “good foundation” for a potential peace deal. The possibility of such a breakthrough raises the prospect of lifting sanctions on Russian oil exports, which could further impact global supply dynamics. However, this prospect also creates price uncertainty, as the potential for increased Russian oil following normalization could exacerbate the existing glut.

Anticipations of U.S. interest rate cuts support oil prices

Adding to the complex market sentiment, expectations of a potential U.S. Federal Reserve interest rate cut in December have supported the mild price gains. Recent economic data showing softer inflation and reduced retail spending have fueled hopes that lower borrowing costs could stimulate economic growth and, by extension, energy demand. Nevertheless, market analysts caution that these price improvements are likely to be short-lived and fragile, describing the uptick more as a technical pause than a strong reversal of the downward trend.

Across the trading day, oil remained under pressure from the overall supply concerns, with Brent hovering below $63 per barrel and WTI just above $58. The balance of geopolitical developments, OPEC+ production policies, and global economic indicators will be critical in shaping oil market trends in the near term.