Crude oil slips as Russia-Ukraine peace talks advance; WTI seen below $52

Global crude oil prices extended losses amid advancing US-brokered peace talks between Russia and Ukraine, raising fears of a deeper supply glut as Western sanctions on Moscow's energy sector could unwind, flooding markets with previously sidelined Russian barrels. WTI plunged 2.5 per cent over the past five trading sessions to $58.05/bbl, shedding 5.5 per cent in the last month and more than 20 per cent since mid-June highs near $73/bbl. The downturn reflects OPEC+ restoring output while non-OPEC producers like the US (now ~13.8 mb/d) ramp up amid muted global consumption growth of just ~0.7 mb/d. IEA forecasts a record 4 mb/d surplus in 2026, pressuring prices further.

 

Ukraine-Russia Peace accord

The Trump administration has brokered a refined peace framework (reduced from an initial 28-point to a 19-point plan) following talks in Geneva and Abu Dhabi. Ukraine has agreed to the "core terms," with only "minor details" remaining, per US and Ukrainian officials. Russia has not yet publicly confirmed, but views it as the "only substantive" plan. The deal aims to end hostilities, provide security guarantees, and enable reconstruction, though it remains controversial for leaning toward Russian demands. There are key points still to be resolved between the US and Ukraine. Moscow and Ukraine carried out airstrikes overnight. Zelenskyy and Trump are set to meet soon to finalise. Oil prices are supported by news of reduced crude exports from Russia, after last Wednesday's data from Vortexa showed Russia's oil product shipments fell to 1.7 million bpd in the first 15 days of November, the lowest in more than 3 years.

 

OPEC+ & US deepening glut

OPEC's crude production is surging toward its 2022 peak of over 30.5 million barrels per day (mbpd), with the OPEC+ alliance restoring approximately 3 per cent of global supply—around 3 mbpd—since April 2025. Yet, amid persistently flat global demand, this ramp-up has intensified an already deepening supply glut. OPEC's November Monthly Oil Market Report flipped its Q3 2025 global balance estimate from a 0.4 mbpd deficit to a 0.5 mbpd surplus, citing unexpected US output surges and accelerated OPEC crude gains.

  US production has shattered records monthly since March, hitting 13.794 mbpd in August 2025, with November preliminaries approaching 13.8 mbpd, per EIA data. Non-OPEC+ nations like Brazil and Guyana are fueling further oversupply, outpacing tepid demand growth of just 1.3 mbpd in 2025. Analysts now project the global glut ballooning to 3 mbpd by end-2026, pressuring prices amid inventory builds and potential OPEC+ pauses on hikes.

 

Asian remains key demand region

Asia will drive incremental global oil demand in 2026, led by India and China. In October 2025, China imported 48.36 million metric tons of crude, equivalent to 11.4 million bpd, up 8.2 per cent Y-o-Y, as state refiners boosted runs to seize market share from independents and optimise export quotas amid rising margins, slowing onshore stockpiles. India's demand is forecast to climb 0.25 mbpd in 2026 to ~5.99 mbpd, fuelled by economic growth and infrastructure.

 

US rate cut optimism

The latest ADP weekly update revealed U.S. private payrolls declining by an average of 13,500 jobs per week over the four weeks ending November 8, signalling accelerating labour market weakness amid the government shutdown's data delays. Compounding this, the Conference Board's November consumer confidence index plunged 6.8 points to a seven-month low of 88.7—below the expected 93.3—reflecting pessimism over jobs, incomes, and inflation. These soft indicators have solidified market pricing for an 82 per cent chance of a 25 bps Fed rate cut at the December 9-10 FOMC meeting.

 

Outlook:

Oil prices initially surged on optimism for the US-brokered Russia-Ukraine peace deal, but underlying uncertainties persist. With core issues like territorial concessions and NATO guarantees unresolved, and hostilities ongoing in eastern Ukraine, fresh updates from Kyiv or Moscow could trigger sharp market swings. In the physical market, prompt Brent time spreads are firming, signalling near-term tightness despite ample supply. WTI futures hold between $57 and $58/bbl through December 2025, with the June 2027 contract around $58/bbl. Amid surging non-OPEC+ output and tepid demand growth, the surplus is forecast to swell to 2.8 mb/d in 2026 before dipping to 2.7 mb/d in 2027. Consequently, WTI prices are poised to breach $52/bbl in 2026, sliding into the low $50s by Q4.  (Disclaimer: Mohammed Imran is a research analyst at Mirae Asset Sharekhan. Views expressed are his own.)