Oil prices slipped on Tuesday as investors braced for a supply surplus due to potential OPEC+ plans for a larger output hike next month and the resumption of oil exports from Iraq's Kurdistan region via Turkey.

Brent crude futures for November delivery, expiring on Tuesday, fell 87 cents, or 1.3%, to $67.10 a barrel by 1:22 p.m. EDT (1722 GMT). The more active December contract fell 82 cents or 1.2% to $66.27.

U.S. West Texas Intermediate crude was $62.61 a barrel, down 84 cents, or 1.3%.

On Monday, Brent and WTI both settled more than 3% lower, their sharpest daily declines since August 1.

OPEC+ may speed up production increases in November from the 137,000 barrels per day hike it made for October at its meeting on Sunday as its leader Saudi Arabia pushes to regain market share, three sources familiar with the talks said.

Eight members of OPEC+ could agree to raise production in November by 274,000-411,000 bpd, or two or three times higher than the October increase, two of the three sources said. OPEC+ pumps about half of the world's oil.

"This (OPEC+) strategy could significantly squeeze margins for high-cost U.S. shale producers, potentially forcing them to scale back the record-level output they've maintained," said StoneX analyst Alex Hodes.

Meanwhile, crude oil flowed on Saturday through a pipeline from the semi-autonomous Kurdistan region in northern Iraq to Turkey for the first time in two and a half years, after an interim deal broke a deadlock, Iraq's oil ministry said.

Oil prices are under pressure in anticipation of OPEC+ deciding to restore additional quantities of oil back to market, along with the resumption of Kurdish exports, so additional supplies are weighing on market prices," said Andrew Lipow, president of Lipow Oil Associates.

The market has remained cautious in recent weeks, balancing supply risks, mainly arising from Ukraine's drone attacks on Russian refineries, with expectations of oversupply and weak demand.

Elsewhere, U.S. President Donald Trump won Israeli Prime Minister Netanyahu's support for a U.S.-backed Gaza peace proposal, but the stance of Hamas was uncertain.

In an ideal scenario, shipping traffic through the Suez Canal would return to normal following a Gaza peace deal, which would remove a significant portion of the geopolitical risk premium, PVM analyst Tamas Varga said.

Adding to the bearish sentiment, the potential risk of a U.S. government shutdown has raised demand concerns, said ANZ analysts in a note.

The market awaits weekly oil stock data from the American Petroleum Institute, later on Tuesday. Analysts polled by Reuters forecast a build in crude and gasoline stocks and a drawdown in distillates.

Source: Investing.com