Oil prices remain stable as traders weigh the threat from Russia against the restart of operations in Norway
Oil prices held steady on Tuesday, as traders balanced the partial restart of production at Norway’s key Johan Sverdrup oilfield with heightened geopolitical tensions following Russia’s revised nuclear threat policy.
Brent crude futures slipped 0.1% to $73.22 per barrel, while West Texas Intermediate (WTI) crude futures dipped 0.1% to $69.08 per barrel.
Geopolitical Concerns: Russia Updates Nuclear Policy
Crude prices surged roughly 3% on Monday, rebounding from near three-week lows after Equinor (NYSE: EQNR) halted operations at Johan Sverdrup, Western Europe’s largest oilfield. Kazakhstan’s Tengiz oilfield also cut output by 28%-30% for repairs expected to conclude by Saturday, according to the country’s energy ministry.
The partial restart of Johan Sverdrup on Tuesday eased some regional supply concerns. However, geopolitical tensions between Russia and the West provided a counterweight. Earlier Tuesday, Russian President Vladimir Putin updated the country’s nuclear doctrine, lowering the threshold for a nuclear strike. The revised policy allows a nuclear response to conventional attacks on Russia or Belarus if they pose a “critical threat to sovereignty or territorial integrity.”
This update follows reports that the White House permitted Ukraine to use U.S.-supplied missiles to strike targets deep within Russia. While Ukraine’s attacks on Russian oil infrastructure have had limited impact on Moscow’s exports, the deployment of U.S. missiles raises concerns over potential disruptions to Russian output.
Pressure from China Demand and Oversupply Risks
Oil markets also faced downward pressure due to weak demand in China, the world’s largest crude importer. Recent economic data and underwhelming stimulus measures have done little to improve sentiment.
Additionally, fears of a global oil surplus in 2025 weighed on prices. Increased production outside the OPEC+ alliance, particularly in the U.S., has pushed output near record levels above 13 million barrels per day.
“Globally, our balance shows that the market will be in surplus through 2025,” noted ING analysts in a report. However, they added that the extent of the surplus would depend on OPEC+ policy decisions, with the group expected to announce its 2024 output plans at a meeting on December 1.
Crude Stockpile Data Awaited
Later in the session, the American Petroleum Institute will release its forecast for U.S. crude stockpiles, with expectations of a slight inventory build. This report will offer additional insight into short-term market dynamics.
