Oil prices fell on Tuesday after OPEC+ announced it would pause planned production hikes for the first quarter of 2026, citing uncertain demand prospects. Brent crude slipped to around $63.99 per barrel, while U.S. West Texas Intermediate traded near $60.10. Traders said a stronger dollar and weak manufacturing data from Asia added to downward pressure.

The decision follows several months of steady output increases that had helped balance the market after earlier supply cuts. However, internal OPEC+ reports indicated that inventories were rising faster than expected, especially in the U.S. and China. This prompted the group to adopt a “wait-and-see” stance rather than risk oversupply.

Analysts believe the pause signals recognition that global oil demand may plateau as economies slow and energy transition policies deepen. Recent data from China’s refiners also showed declining throughput, a sign of soft consumption. The combination of higher inventories and lower demand expectations has capped price gains.

Energy companies are beginning to feel the strain as lower prices eat into profit margins. Some firms have already delayed investment in new drilling projects, while others are focusing on cost discipline and asset optimization. Smaller producers may struggle if prices remain below $65 for an extended period.

For the broader global economy, the dip in oil prices offers relief for inflation but raises questions about energy-sector investment and long-term supply security.

Source: Reuters.