Background on Key Figures and Context
Oil prices fell on Monday, still under pressure from increased production in the oil market and a slowing Chinese economy. The benchmark Brent crude oil, with December delivery, dropped by 0.46% to reach $61.01, nearing its lowest levels since early May. Its U.S. counterpart, West Texas Intermediate (WTI), with November delivery, fell by 0.03% to $57.52.
Increased Oil Production and OPEC+ Quotas
Andy Lipow from Lipow Oil Associates explained to AFP that oil prices remain under pressure due to the continuous increase in supply, particularly with “the rise in quotas” from OPEC+ members. Since April, the cartel has significantly boosted its production, leading to an oversupply compared to demand in the market.
Increased production in the U.S., Brazil, Argentina, and Guyana also adds pressure to the market
International Energy Agency’s Outlook on Oil Supply
According to the International Energy Agency’s (IEA) latest monthly report on the oil market, there is expected to be an excess supply of around 2.2 million barrels per day (mb/d) in 2025, with the potential to reach nearly 4 mb/d in 2026.
As a result, oil prices are approaching a “contango configuration,” according to Phil Flynn from Price Futures Group, meaning that the price for immediate delivery is lower than the price for a future contract.
Impact of Slowing Chinese Economy
Phil Flynn also pointed out that recent economic data from China is not encouraging. The Chinese government announced on Monday a deceleration of its growth in the third quarter of 2025, at the slowest pace in a year (+4.8% interannual), due to decreased domestic consumption and trade tensions.
As China is the world’s largest importer of crude oil, market participants closely monitor the country’s economic health.
Trade Developments and Market Anticipation
The market is also watching recent trade-related events, following China and the U.S.’s agreement on Saturday to prepare for new negotiations.
Key Questions and Answers
- What factors are causing oil prices to fall? Oil prices are falling due to increased production in the global oil market, led by OPEC+, as well as rising output from the U.S., Brazil, Argentina, and Guyana. Additionally, concerns over a slowing Chinese economy contribute to the downward pressure on oil prices.
- What does the IEA’s outlook predict for oil supply and demand? The IEA forecasts an excess oil supply of approximately 2.2 mb/d in 2025, which could grow to nearly 4 mb/d in 2026. This oversupply is expected to put further downward pressure on oil prices.
- How is China’s economic slowdown affecting oil prices? As the world’s largest importer of crude oil, a slowdown in China’s economy directly impacts global oil demand. This decrease in demand, coupled with the oversupply in the market, contributes to falling oil prices.
- What are the recent trade developments between China and the U.S.? China and the U.S. have agreed to prepare for new trade negotiations, following their recent discussions.
