Oil Prices Continue to Decline Amid Supply Glut Pressures and Anticipation of IEA and OPEC+ Reports

According to TradingEconomics, oil prices continued to decline in Tuesday's trading, with West Texas Intermediate crude trading below $59 per barrel after a 2% drop in the previous session, as expectations of a global supply surplus overshadowed geopolitical risks that typically support prices.

Investors are awaiting reports from the International Energy Agency (IEA) and OPEC+ this week, which are expected to provide updated guidance on supply and demand balance. The IEA had predicted a significant surplus in 2026, while OPEC+ adjusted its outlook last month from a deficit to a surplus for the third quarter, adding downward pressure on prices.

Further pressure came from recent developments in Iraq, where reports indicated the resumption of operations at the West Qurna-2 field operated by Lukoil after a temporary halt due to a pipeline leak. This field accounts for 0.5% of global supplies, reinforcing signals of increased supply in the markets.

Despite ongoing geopolitical tensions, including stalled peace negotiations in Ukraine and escalating disputes between the U.S. and Venezuela, these risks have not been enough to offset the downward impact of rising supplies.

Traders are also monitoring the upcoming U.S. Federal Reserve meeting, with expectations of a 25 basis point rate cut - a cut that could boost economic activity and increase energy demand, but has not yet provided significant support for prices amid prevailing surplus expectations.

Current market movements suggest that the oil equation is increasingly driven by supply and less by geopolitical risks, making the IEA and OPEC+ reports this week directly impactful on near-term price direction.