Oil Prices Decline as Market Surplus Fears Overshadow US Pressure on India. Oil markets faced renewed pressure this week, with crude prices falling sharply on concerns that global supplies are tipping into surplus. The decline comes despite the United States intensifying its diplomatic push to persuade India to reduce or end its reliance on Russian oil.
Brent and WTI Prices Slip
Brent crude slipped below $68 per barrel, while West Texas Intermediate (WTI) hovered around $64 per barrel, marking one of the steepest monthly drops since April. The sharp decline reflects growing unease among traders and investors who believe that supply will outpace demand in the coming months.
U.S. Pressure on India
White House trade adviser Peter Navarro stepped up criticism of India, calling on New Delhi to halt its purchases of Russian crude. He accused Indian authorities of being “arrogant” and linked their continued energy trade with Moscow to the ongoing conflict in Ukraine, even describing it as “Modi’s war.”
This criticism comes after Washington doubled tariffs on Russian imports to 50%, seeking to further isolate Moscow’s energy sector. However, India’s refiners signaled they plan to maintain the bulk of their Russian oil purchases for October and beyond, despite U.S. objections.
Notably, the U.S. has focused its attention on India while largely sparing China, even though Beijing is also one of the largest buyers of Russian crude.
Market Outlook: Concerns of Oversupply
Traders warn that the oil market could face a significant surplus in the upcoming quarters. The Organization of Petroleum Exporting Countries and its allies (OPEC+) recently eased supply restrictions, while non-OPEC producers have also increased output.
Analysts suggest that this imbalance could keep prices under pressure.
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Warren Patterson, head of commodities strategy at ING Groep NV, said:
“The scale of the upcoming surplus means the outlook for the market remains firmly bearish. However, tighter sanctions against Russia or new tariffs could still create upside risks.” -
Citigroup analysts echoed this sentiment, forecasting Brent to average $66 per barrel this quarter and $63 per barrel in Q4 2025, when oversupply is expected to exert even greater pressure.
Technical Indicators
Although Brent futures remain in backwardation—a market structure where near-term contracts trade higher than longer-dated ones—the spread has narrowed. The gap between the two nearest Brent contracts is now 59 cents per barrel, down from 72 cents a month ago, suggesting weakening demand for immediate supply.
Geopolitical Risks: Ukraine Conflict Escalates
The war in Ukraine continues to add volatility to global oil dynamics. Kyiv launched fresh strikes on Russian refineries and energy infrastructure, damaging at least two facilities. In response, Moscow carried out a series of drone and missile attacks on the Ukrainian capital, highlighting the ongoing risks to energy stability in the region.
U.S. Market Update
A U.S. government report provided a mixed picture of domestic energy conditions:
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Refinery runs dropped across all regions, pulling nationwide processing activity to its lowest level since early July.
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Meanwhile, crude stockpiles at Cushing, Oklahoma, the delivery hub for WTI futures, declined for the first time in eight weeks, easing some concerns of oversupply in the short term.
Conclusion
Global oil markets are caught between geopolitical pressures and supply-demand imbalances. While U.S. efforts to push India away from Russian oil imports intensify, traders remain more focused on the looming market surplus, which could drive prices even lower in the months ahead. Unless fresh sanctions or disruptions occur, analysts believe oil will remain under bearish pressure heading into year-end.