Oil Slips as Supply Fears Eclipse War Premium

Key Takeaways:

*Kurdish exports resume: Up to 230,000 bpd expected to re-enter markets after a 2.5-year halt, adding supply headwinds.

*OPEC+ output hikes: Group signals another 137,000 bpd increase in November, though delivery remains questionable.

*Russian supply risks linger: Ukrainian drone strikes continue to disrupt Russian refinery operations, offering partial support.

Market Summary:

Crude oil prices extended their decline for a second consecutive session as supply concerns outweighed residual geopolitical risk premiums. The resumption of exports from Iraq’s Kurdistan region, following a two-and-a-half-year suspension, is expected to gradually return up to 230,000 barrels per day to global markets, adding fresh weight to an already fragile supply-demand balance. At the same time, reports that OPEC+ is preparing to authorize another production increase of at least 137,000 barrels per day for November signaled the group’s continued pivot toward regaining market share, further fueling bearish sentiment.

Still, skepticism lingers over whether OPEC+ can fully deliver on its announced supply boosts. The bloc has consistently undershot production targets by nearly half a million barrels per day, with many members operating near capacity limits. Analysts argue that actual increases will likely fall short of headline figures, softening the supply shock but leaving the market wary of a potential surplus if Saudi Arabia maintains elevated output levels.

On the geopolitical front, tentative signs of easing tensions in the Middle East have also stripped away some of oil’s war premium. U.S. President Donald Trump’s unveiling of a 20-point Gaza peace plan, supported by Israel, has introduced the prospect of a ceasefire in a region that underpins roughly a third of global supply. While the absence of Hamas in negotiations leaves the path to peace uncertain, even the prospect of de-escalation has reduced safe-haven bids in crude markets. This offset the bullish impact of ongoing Ukrainian drone strikes on Russian refineries, which continue to disrupt exports from one of the world’s top producers.

In the near term, oil’s direction will be defined by the balance between OPEC+ production decisions and the trajectory of Middle East tensions. Unless geopolitical risks flare back up or OPEC+ struggles more visibly to meet its own quotas, the market bias appears tilted toward continued weakness, with prices vulnerable to further pressure from rising supply expectations.

Technical Analysis 

USOIL, H4: 

US crude oil prices have come under renewed pressure, slipping back toward the $63.00 region after failing to sustain gains above the $65.90 resistance area. The rejection from the recent swing high signals that upside momentum is losing traction, with sellers gradually regaining control. Price is now hovering just above the $63.00 support, and a clean break below this level could expose the next downside target at $61.80.

Momentum indicators reinforce the bearish tilt. The RSI has dropped sharply toward the 38 level, indicating growing downside momentum, while the MACD has flipped into negative territory, showing increased bearish pressure. Short-term moving averages have also turned lower, suggesting that the broader consolidation seen through September may now be resolving in favor of sellers.

For the immediate outlook, a bounce cannot be ruled out if $63.00 holds, with resistance seen at $64.25 and then $65.90. However, failure to defend the $63.00 floor would likely accelerate a deeper retracement toward $61.80.

Resistance level: 64.25, 65.90

Support level: 63.00, 61.80