Oil Prices Slide as Global Supply Surges, Heightening Glut Concerns

Oil prices are poised for a second consecutive week of declines, primarily driven by escalating global supply levels that are intensifying concerns over a developing glut. West Texas Intermediate (WTI) crude saw a slight increase towards $60 a barrel but remained on track for a weekly drop of approximately 2%. Brent crude settled near $63 on Thursday.

The Organization of the Petroleum Exporting Countries and its allies (OPEC+) reported a modest increase in output last month as key members resumed halted supplies. This adds to production growth already seen in other nations, including Brazil and the United States. The International Energy Agency (IEA) had previously predicted a record oversupply in 2026, and it now anticipates this surplus to be larger than initially estimated.

Further indicators of a weakening outlook are evident in key price gauges. The narrowing of the prompt spread for WTI futures—which reflects the premium of the front-month contract over the next month's contract—to near February lows in recent weeks signals market anticipation of ample supply.

Market participants are keenly awaiting a series of reports next week from the IEA and OPEC to gain a clearer understanding of the supply-demand balance. While geopolitical factors, such as stepped-up Ukrainian attacks on Russian energy infrastructure and US sanctions on major Russian oil producers, have offered some temporary price support, the overall trend points towards increased supply.

Separately, a commodity trader, Gunvor Group, withdrew its bid for the international operations of Lukoil PJSC after the U.S. Treasury Department declined to grant it a license for the transaction. This withdrawal affects assets equivalent to Ecuador's daily oil production.

Impact This news directly impacts the Indian stock market by influencing inflation, the cost of goods and services for consumers, and operational expenses for many industries, particularly transportation and manufacturing. Lower oil prices can reduce input costs for some companies, potentially boosting profitability, while also affecting the revenue of energy producers. Impact Rating: 7/10

Difficult Terms: * West Texas Intermediate (WTI): A specific grade of crude oil used as a benchmark in oil pricing, particularly in North America. * Brent crude: A major global oil benchmark, used to price two-thirds of the world's internationally traded crude oil supplies. * OPEC+: The Organization of the Petroleum Exporting Countries (OPEC) plus its allies, a group of oil-producing nations that coordinate production levels to influence global oil prices. * Oversupply (Glut): A situation where the supply of a commodity, in this case oil, exceeds the demand for it, leading to falling prices. * Prompt Spread: In futures markets, the difference in price between the nearest-to-expire contract (front-month) and subsequent contracts. A narrowing prompt spread often indicates increasing nearby supply or weakening demand. * IEA (International Energy Agency): An autonomous intergovernmental organization that focuses on energy security, economic development, and environmental protection. * U.S. Treasury Department: The executive agency responsible for managing the U.S. government's finances. * Sanctioning: Imposing penalties or restrictions on a country, organization, or individual, often for political reasons. * Upstream Production: Refers to the exploration and production of crude oil and natural gas.