Oil prices were steady in Asian trade on Tuesday after a sharp drop in the previous session, as traders weighed renewed supply from Iraq, developments in Ukraine peace efforts, and expectations ahead of the Federal Reserve meeting.
As of 21:08 ET (02:08 GMT), Brent Oil Futures expiring in February ticked down 0.1% to $62.40 per barrel, while West Texas Intermediate (WTI) crude futures fell 0.2% to $58.70 per barrel.
Both contracts slipped 2% on Monday after Iraq’s move to restore production at the West Qurna-2 oilfield, a site representing a meaningful share of national exports.
Ukraine peace talks, Fed rate decision in focus
Geopolitical focus shifted to Europe, where Ukraine signaled it will present a revised peace proposal to the U.S. after talks in London between President Volodymyr Zelenskiy and leaders of France, Germany, and Britain.
The prospect of progress toward a negotiated settlement could remove part of the geopolitical risk premium embedded in crude prices. A potential deal could also revive Russian oil flows more freely into global markets, which may exert additional downward pressure.
Markets are also awaiting the start of the two-day Federal Reserve meeting later on Tuesday.
Investors expect an interest rate cut, with futures pricing showing 87% bets that policymakers will ease policy amid softer economic indicators.
A cut could bolster demand prospects by lowering borrowing costs and supporting fuel consumption.
ING warns oil surplus to weigh on prices in 2026
Oil markets are set to face a growing surplus in 2026, putting sustained pressure on prices, ING analysts said in a research note.
Analysts expect a surplus of more than 2 million barrels per day next year as OPEC+ unwinds supply cuts faster than anticipated and non-OPEC production continues to expand.
Global supply is forecast to rise by 2.1 million bpd, while demand is seen increasing by only 800,000 bpd. ING expects Brent crude to average $57 a barrel in 2026, warning that rising inventories and a deeper contango structure could weigh further on the market.