Crude Prices Fall on Hopes of a Russian-Ukraine Peace Deal

Core Insights - Crude oil and gasoline prices have dropped to four-week lows, influenced by a strong dollar and geopolitical developments in Ukraine [2][4] - OPEC has revised its Q3 global oil market outlook from a deficit to a surplus, now estimating a surplus of 500,000 barrels per day (bpd) [3] - Geopolitical tensions, including reduced Russian crude exports and military actions in the Gulf of Oman, continue to support oil prices [5][4] Price Movements - January WTI crude oil closed down by $0.94 (-1.59%) and January RBOB gasoline down by $0.0299 (-1.62%) [1] - The dollar index reached a 5.5-month high, contributing to bearish sentiment in energy prices [2] OPEC and Production Estimates - OPEC's latest report indicates a shift to a surplus due to higher-than-expected US production and increased OPEC output [3] - The EIA has raised its 2025 US crude production estimate to 13.59 million bpd from 13.53 million bpd [3] - OPEC+ plans to increase production by 137,000 bpd in December but will pause further increases in Q1 2026 due to anticipated global oil surplus [6] Geopolitical Factors - Russian crude exports have been significantly impacted, with shipments falling to 1.7 million bpd, the lowest in over three years [4] - Ukraine's military actions have reduced Russian refining capacity by 13% to 20%, limiting crude export capabilities [4] - Ongoing geopolitical risks, including tensions with Iran and military buildup related to Venezuela, are providing underlying support for oil prices [5]