Oil prices eased on Tuesday, pressured by growing expectations that global supply will outpace demand next year—overshadowing concerns about Russian exports remaining constrained as Ukraine peace talks show no progress.

Brent crude slipped 0.4% to $63.10 a barrel by 0500 GMT, while WTI fell 0.4% to $58.61. The pullback follows a 1.3% gain on Monday driven by renewed uncertainty over a Russia-Ukraine peace deal, which kept expectations of unrestricted Russian flows in check.

Despite worries about Russian shipments under Western sanctions, the broader outlook for 2026 points to a looser market. Many forecasts indicate supply growth will exceed demand next year, creating a potential glut.

“In the short term, the key risk is oversupply, and current price levels seem vulnerable,” said Priyanka Sachdeva of Phillip Nova.

New sanctions against Russian energy giants Rosneft and Lukoil, along with EU restrictions on fuels refined from Russian crude, have caused some Indian refiners—especially Reliance—to trim purchases. With fewer buyers, Russia is turning aggressively toward China. Deputy Prime Minister Alexander Novak said Moscow is discussing ways to expand oil flows to Beijing.

Analysts, however, remain focused on widening imbalances. Deutsche Bank expects a 2026 surplus of at least 2 million bpd, with no return to deficits through 2027. “The path forward into 2026 remains a bearish one,” said analyst Michael Hsueh.

While stalled peace talks could keep restrictions on Russian oil in place, expectations of an oversupplied market are dominating sentiment.

Oil is finding some support from rising bets that the U.S. Federal Reserve will cut rates at its December 9–10 meeting—potentially stimulating economic growth and boosting demand.

“The oil market is in a tug-of-war between a caution-driven supply overhang and demand hopes predicated on easier monetary policy,” Sachdeva added.