Oil Prices Drop Over $2 as OPEC Predicts Balanced Market by 2026

Oil prices fell over $2 per barrel on Wednesday after OPEC’s latest report indicated that global oil supply will match demand by 2026, signaling an end to its earlier supply deficit forecasts. Brent crude closed at $62.71, down 3.76%, while WTI fell 4.18% to $58.49. Analysts said the shift toward a “balanced” market outlook and signs of oversupply weighed heavily on sentiment, even as the IEA projected oil demand growth through 2050. Traders noted that some crude cargoes are struggling to find buyers, reflecting broader weakness in demand and the U.S. economy. OPEC+ recently paused further production increases, and analysts said a U.S. government reopening could provide limited short-term support for oil demand.

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OPEC Sees Third-Quarter Oil Surplus as US Output Boosts Global Supply

OPEC revised its view of the global oil market in the third quarter from a deficit to a surplus, citing higher-than-expected U.S. production and increased output from OPEC+ members. Global oil supply exceeded demand by 500,000 bpd, a sharp turnaround from the 400,000-barrel shortfall projected last month. The report highlighted that OPEC+ pumped more crude than needed, though key members have agreed to pause further production increases in the first quarter of 2026. Oil futures have fallen about 14% this year, trading near $65 a barrel, as analysts warn of continued global oversupply. OPEC welcomed the IEA’s revised outlook, which now projects oil demand growth for several more decades, aligning with OPEC’s long-term perspective.

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IEA Says Global Oil and Gas Demand May Keep Rising Through 2050 Despite Climate Goals

The International Energy Agency (IEA) said global oil and gas demand could continue growing until 2050, reversing its earlier projections of an imminent decline as governments shift focus toward energy security and economic growth. In its latest World Energy Outlook, the IEA forecast oil demand reaching 113 million barrels per day by mid-century, up 13% from 2024, under current policy trends. The agency acknowledged that the world is on track to exceed the 1.5°C climate target set in the Paris Agreement, as clean energy adoption lags and data centre expansion drives power demand. The IEA’s revised stance follows U.S. criticism of its climate emphasis and aligns more closely with OPEC’s rejection of “peak oil” theories. The report also projects global LNG export capacity will surge 50% by 2030, with strong demand growth driven by AI and digital infrastructure.

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EIA Sees Record U.S. Oil Output and Rising Oversupply Driving Prices Lower Through 2026

The U.S. Energy Information Administration (EIA) raised its forecast for U.S. oil production to a record 13.59 million bpd in 2025, slightly above earlier estimates, driven by stronger-than-expected output in August. Global crude and liquid fuels production is projected to reach 106 million bpd this year, exceeding consumption at 104.1 million bpd, leading to rising inventories and a potential market surplus through 2026. The EIA expects global crude stocks to climb from 2.93 billion barrels in Q4 2025 to 3.18 billion barrels by late 2026. As oversupply weighs on prices, Brent crude is forecast to average $68.76 per barrel this year and WTI about $65.15, both down sharply from 2024 levels. Lower oil prices will push U.S. gasoline averages below $3 per gallon for the first time since 2020 and diesel to $3.50 per gallon by 2026.

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U.S. Buys 900,000 Barrels to Rebuild Strategic Petroleum Reserve After Record Drawdowns

The U.S. Energy Department has purchased 900,000 barrels of crude oil worth nearly $56 million to help replenish the Strategic Petroleum Reserve (SPR). Of this, Trafigura Trading will deliver 600,000 barrels and Energy Transfer Crude Marketing will supply 300,000 barrels, with deliveries scheduled for December and January to the Bryan Mound site in Texas. The Trump administration has faced funding limitations and maintenance challenges at the SPR, whose infrastructure is vulnerable to corrosion from salt exposure. Congress approved only $171 million for SPR purchases and maintenance, well below the initially proposed $1.3 billion. The SPR currently holds over 410 million barrels, down from its 700-million-barrel capacity, following record sales under former President Biden, including a 180-million-barrel release in 2022 after Russia’s invasion of Ukraine.

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Billion-Barrel Oil Buildup at Sea Highlights Sanctions Strains on Russia, Iran, Venezuela

A record buildup of roughly 1 billion barrels of oil at sea includes a disproportionately large share from sanctioned countries such as Russia, Iran, and Venezuela, reflecting disruptions caused by Western measures. Russian oil accounts for the largest portion, as cargoes face difficulty discharging due to U.S. sanctions on Rosneft and Lukoil, with Indian refineries hesitant to buy and China showing limited interest. Iranian shipments have also surged to a seven-year high, coinciding with U.S. sanctions on Chinese terminals involved in Iranian oil trade. Despite the sanctions-driven bottleneck, global oil output is increasing, led by Saudi Arabia and the U.S., which have contributed significantly to the overall oil-on-water rise. The buildup poses risks to the revenues of sanctioned countries and adds uncertainty to short-term oil price movements, as traders monitor how these barrels will be absorbed by global markets.

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US Sanctions on Chinese Terminals Keep VLCC Markets Tight Amid Legal and Logistical Bottlenecks

US sanctions on Chinese terminals, including Rizhao Shihua and Shandong Jincheng Petrochemical, have disrupted cargo flows and legal documentation, creating bottlenecks in the oil trade. Payments to these terminals are nearly impossible, and vessels are avoiding calls, effectively stranding lawful oil in storage or at anchorage. The sanctions raise concerns over Iranian commingling and complicate financing, as banks may refuse to process dollar transactions involving the affected terminals. These disruptions are tightening VLCC tonnage supply, keeping earnings firm, and pushing some vessels toward the shadow fleet at discounted values. Traders and lawyers are revising contracts to include clearer sanctions, termination, and redelivery clauses to mitigate risks, as the US shows no sign of easing its sanctions approach.

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Canada Sanctions Shadow Fleet Vessels and Russian Drone Makers, Aligning with G7 Actions

Canada has imposed new sanctions on Russia, targeting drone manufacturers and 100 vessels from its “shadow fleet.” The measures also include entities supplying cyber infrastructure and those involved with liquefied natural gas. Announced by Foreign Affairs Minister Anita Anand alongside her Ukrainian counterpart at a G7 meeting, the sanctions are smaller in scope than earlier Canadian actions this year. They are intended to complement recent EU, UK, and US measures, including the October U.S. sanctions on Russian oil giants Rosneft and Lukoil. Western sanctions on Russia, begun after Crimea’s annexation in 2014, have already cost the country an estimated $450 billion in war funds from February 2022 to June 2025.

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Global Scramble for Lukoil Assets Ahead of U.S. Sanctions Deadline

Lukoil’s foreign assets—from Egypt to Kazakhstan—are drawing a rush of potential buyers as U.S. sanctions set to take effect on November 21 threaten to block further deals. The sanctions have already disrupted Lukoil’s operations in Iraq, Finland, and Bulgaria, and halted a planned sale to trader Gunvor. State firms like KazMunayGas and Socar, along with Shell and Cengiz Holding, are eyeing Lukoil’s assets across Kazakhstan, Ghana, Nigeria, Egypt, Moldova, and Bulgaria. Analysts say Lukoil faces a dilemma: selling assets now risks proceeds being frozen by the U.S. Treasury, while waiting could lead to nationalisation or asset freezes. Some experts suggest Lukoil may follow Rosneft’s 2022 strategy, keeping ownership while assets fall under foreign control.

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Russia’s Oil Output Rises in October, Still Below OPEC+ Quota

Russia’s oil production rose to 9.382 million bpd in October, up 47,000 bpd from September, according to OPEC’s monthly report. Despite the increase, output remained slightly below Russia’s OPEC+ quota of 9.481 million bpd, which includes adjustments for previous overproduction. OPEC+, comprising OPEC members and allies like Russia, recently approved a small output hike for December and will pause increases in early 2026. Meanwhile, Kazakhstan’s production fell by 155,000 bpd to 1.707 million bpd, still above its October quota of 1.529 million bpd. The country continues to exceed targets largely due to expanded output from the Chevron-led Tengiz oilfield.

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Russia and Kazakhstan Deepen Energy Cooperation, Pledge Stable Oil Transit via CPC

Russia and Kazakhstan agreed to strengthen cooperation in the oil, gas, coal, and power sectors following talks between Presidents Vladimir Putin and Kassym-Jomart Tokayev in Moscow. Kazakhstan relies heavily on Russia for energy exports, with over 80% of its oil transported via the Caspian Pipeline Consortium (CPC) to Russia’s Black Sea terminal. The leaders also discussed gas supply to Kazakhstan’s border regions and transit routes to third countries. Both sides emphasized ensuring uninterrupted CPC operations, which were disrupted earlier this year by a drone strike. Russia additionally aims to expand oil exports to China through Kazakhstan, with 2024 transit volumes reaching about 10.2 million tons (204,000 barrels per day).

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Saudi Crude Exports to China Fall for Second Month Amid Refinery Maintenance, Quota Delays

Saudi Arabia is expected to ship around 36 million barrels of crude oil to China in December, down from about 38 million barrels in November, according to industry sources. The decline marks the second consecutive monthly drop in Saudi crude exports to China. The reduction comes as some Chinese refineries undergo maintenance and independent refiners await Beijing’s 2026 import quotas, limiting their ability to buy. One Chinese buyer reportedly cut its December intake after already lifting most of its annual contractual supply. Meanwhile, India is increasing imports from Middle Eastern producers such as Saudi Arabia, Iraq, and Kuwait, offsetting some of the regional demand slowdown from China.

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Libya’s Zallaf Exports First 600,000-Barrel Cargo from Chadar Oil Field

Libya’s Zallaf for Oil and Gas Co has exported its first shipment of over 600,000 barrels of Sidra crude from the Chadar (NC-126) oil field in the Sirte Basin, marking a major milestone for the company. The shipment’s destination was not disclosed, according to Zallaf’s statement on Facebook. The field began production in January, outputting about 1,500 barrels of oil and 7.5 million cubic feet of associated gas per day. Over five development wells have been completed as part of the project’s first phase. In 2023, Zallaf also partnered with U.S.-based Honeywell on a $500–$600 million South Refinery project that will process 30,000 barrels per day of crude oil.

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Dangote Group to Invest $1 Billion in Zimbabwe’s Pipeline, Power, and Cement Projects

Nigeria’s Dangote Group will invest at least $1 billion in Zimbabwe, focusing on a petroleum pipeline, power generation, and a cement plant, according to CEO Aliko Dangote. The agreement was signed in Harare after Dangote met with President Emmerson Mnangagwa. Dangote said the planned pipeline will support the company’s broader goal of developing the world’s largest oil refinery. He noted that improved government stability and transparency encouraged his renewed interest in Zimbabwe, following an abandoned 2015 plan. The Dangote Group, active in 17 African countries, is already a major player in cement manufacturing and energy infrastructure.

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Seatankers Expands VLCC Fleet with Two More Orders at Hengli Amid Surge in Chinese Newbuildings

John Fredriksen’s Seatankers has ordered two additional VLCCs at Hengli Shipbuilding in China, bringing its total at the yard to eight. Hengli has seen a surge in VLCC orders, with 21 firm newbuildings inked since September, including vessels for Greek owners like Dynacom, TMS Tankers, and Eastern Pacific Shipping. Attractive pricing and early delivery dates—around $118 million per ship for 2026–2027—are drawing buyers to Hengli over South Korean yards, where similar VLCCs cost more. Many of the vessels may be “resale newbuildings” initially ordered by Hengli Group for potential buyers in the market. Analysts note the booming orders are supported by a medium-term positive outlook for VLCC demand, driven by an aging fleet and oil exporters aiming to maximize shipments.