Oil prices closed slightly lower on Monday (September 22nd) as concerns about oversupply outweighed geopolitical tensions in Russia and the Middle East. Brent crude futures closed 11 cents, or 0.2%, lower at $66.57 a barrel. The global benchmark has traded between $65.50 and $69 since early August.

U.S. West Texas Intermediate (WTI) crude for October, which expires on Monday, closed down 4 cents, or 0.1%, at $62.64 a barrel. The more actively traded second-month contract fell 12 cents, or 0.2%, to $62.28.

"Traders are again focusing on the possibility of an imminent oversupply in the global oil market unless the U.S. and the European Union can agree on tighter tariffs on countries buying Russian crude," said Dennis Kissler, senior vice president of trading at BOK Financial.

Iraq, the second-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), has increased oil exports under the OPEC+ agreement, according to SOMO, the state oil marketing company. They also expect September exports to range between 3.4 million and 3.45 million barrels per day (bpd).

Kuwait's crude oil production capacity reached 3.2 million bpd, the highest estimate in more than 10 years, Oil Minister Tariq Al-Roumi told local newspaper Al Qabas. US equities, which often move in tandem with oil prices, slumped amid the visa crackdown and speculation about the Federal Reserve's next interest rate move.

Fed officials have cast doubt on the need for further interest rate cuts while inflation remains above the central bank's 2% target and the labor market remains near full employment. Lower borrowing costs typically boost oil demand.

Tensions have risen in the Middle East after several Western countries recognized the state of Palestine, and in Eastern Europe after Estonia said Russian fighter jets had entered its airspace without permission on Friday. However, none of these developments have resulted in any immediate disruptions to oil supplies.

Brent and WTI closed down more than 1% on Friday, marking a slight decline last week as concerns about large supplies and falling demand weighed on sentiment. "The oil market outlook is that global oil demand will decline from the third quarter to the fourth quarter and back to the first quarter of 2026. At the same time, OPEC+ production is on track to increase," said SEB analysts.

"The big question, of course, is whether China will amass a growing surplus or whether oil prices will be pushed down to the 50s. We believe the latter." Iraq has also given preliminary approval to a plan to resume oil exports via pipeline from the semi-autonomous Kurdistan region via Turkey, sources told Reuters. (alg)

Source: Reuters