Oil prices slipped on Wednesday as investors perceived the risk of an industry glut.
West Texas Intermediate (CL=F) futures fell as much as 1.6% to hover above $62 per barrel. Brent crude (BZ=F), the international benchmark, also dropped to trade below $65 per barrel before paring losses.
Prices took a leg lower after government data showed that US crude stockpiles rose last week to 3.04 million barrels, the highest level in two months.
Fears of oversupply in the market were accentuated by a report from the International Energy Agency indicating world supply could outpace demand by a record 2.96 million barrels per day in 2026, surpassing even the glut buildup during the pandemic in 2020.
The report points to increases in production from the Organization of Petroleum Exporting Countries and its allies (OPEC+) and strong output driven by non-OPEC nations such as the US, Brazil, and Guyana.
The agency also noted global oil inventories rose for the fifth consecutive month in June to reach a 46-month high.
“While oil market balances look ever more bloated as forecast supply far eclipses demand towards year-end and in 2026, additional sanctions on Russia and Iran may curb supplies from the world’s third and fifth largest producers,” the report said.
On Wednesday, President Trump said Russia would face “severe consequences” if Moscow did not stop the ongoing war in Ukraine following an upcoming summit between the president and Russian leader Vladimir Putin, though he did not specify what those measures were.
Goldman Sachs analysts also see the possibility of sanctions on oil-producing nations as a catalyst that could cause prices to rise. However, the firm’s base case for now is that Brent will average $64 per barrel in the fourth quarter of this year and $56 in 2026 due to excess supply.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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