The expectation of oversupply in the market is putting pressure on oil prices, and increasing production in Iraq and Russia may become key variables

After experiencing consecutive declines, international oil prices stabilized on Monday. However, concerns about oversupply in the market have intensified, putting sustained pressure on oil prices.

At present, Brent crude oil prices have fallen below $75 per barrel, while WTI crude oil prices remain above $70 per barrel. It is worth noting that the recent contract price of WTI crude oil was once lower than next month's contract price, forming what the market calls a "forward premium" structure. This signal usually indicates that the market supply is abundant and demand is relatively weak.

The sentiment in the oil market remains sluggish, with spot prices weakening and forward spreads indicating that the physical market is weakening. "- Warren Patterson, Head of Commodity Strategy at ING Group

Two major energy institutions have recently predicted that there may be a slight oversupply in the global oil market by 2024. At the same time, the uncertainty factors on the supply side are also increasing. Iraqi Kurdish Autonomous Region government officials said that the region may resume oil exports next month, and the Trump administration's measures to promote the end of the Russia-Ukraine conflict may prompt Russia to increase its crude oil exports.

The market is concerned about the US Iran relationship, and the feasibility of US sanctions on Iranian oil is questionable

In addition to supply pressures from Russia and Iraq, the US policy towards Iranian oil exports has also become a focus of market attention.

Last Friday, US Treasury Secretary Scott Bessent stated that Washington hopes to compress Iran's oil exports to below 10% of current levels. However, the market is skeptical about the feasibility of this plan, leading to a brief rise in oil prices before falling back.

Iran is a member of the Organization of the Petroleum Exporting Countries (OPEC), and its oil export policy is heavily influenced by the United States. However, in the context of uncertain global demand recovery and sustained supply side easing, there are still doubts about whether the United States can truly compress Iran's oil exports.

Technical Trend of Oil Prices and Market Sentiment: Short term Pressure, Medium - to Long Term Support Still Exists

From a market technical perspective, oil prices are facing significant downward pressure in the short term, but it is still necessary to pay attention to the dynamic changes in future supply and demand.

The recent changes in market structure - from "spot premium" to "forward premium" - mean that short-term supply pressure has increased, and market demand has not effectively digested the newly added production.

However, in the medium to long term, OPEC+'s production reduction policy, demand growth brought about by global economic recovery, and geopolitical risks may still provide some support for oil prices.

If the growth of crude oil supply from Iraq and Russia meets expectations, and the United States is unable to effectively restrict Iran's oil exports, oil prices may continue to be under pressure. Conversely, if OPEC+takes further production reduction measures or global demand rebounds, there is still room for oil prices to rise. "- An energy market analyst

FXCUE Editor's viewpoint: The pressure on the supply side of the market is increasing, and the trend of oil prices depends on the speed of demand recovery

At present, the core influencing factors of oil prices still lie in global supply dynamics and the speed of demand recovery. In the short term, there is still significant uncertainty regarding the potential increase in production by Iraq and Russia, as well as the effectiveness of US sanctions against Iran.

If global economic growth slows down in the future, leading to sustained weakness on the demand side and high supply side, oil prices may further decline. However, if OPEC+takes more intervention measures or if there is unexpected growth in demand, there is still a possibility for oil prices to rebound.