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Oil Prices Drop Below $60 as Gaza Ceasefire and Trade War Fears Mount

Oil Drops Below $60 on Ceasefire and Trade Tensions

Oil prices fell sharply to multi-month lows as geopolitical risk premiums evaporated following Gaza ceasefire progress while Trump tariff threats intensified trade war concerns.

  • WTI crude settled at $58.90 per barrel Friday
  • Brent crude closed down at $62.73 per barrel
  • Israel-Gaza ceasefire erased geopolitical risk premium significantly
  • Trump tariff threats revived global demand concerns
  • OPEC+ raised output by 137,000 bpd monthly
  • Supply glut concerns continue to weigh heavily
  • Russian refinery disruption provided only limited support
  • Fourth quarter outlook remains bearish for prices

Oil prices dropped sharply to multi-month lows on October 10, 2025, with WTI crude falling below $60 per barrel for the first time since May as geopolitical tensions eased and trade war fears intensified. The decline came despite OPEC+ announcing a modest 137,000 bpd production increase for November.

OPEC+ Maintains Cautious Output Strategy

The OPEC+ alliance confirmed on October 5 that eight member countries including Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman would raise oil output by 137,000 barrels per day starting in November 2025 [1][2]. This matched the October increase and fell well below market speculation of a more aggressive hike.

Analysts from Rystad Energy noted that while the market had anticipated a slightly larger boost, the incremental increase exacerbates the already excessive supply situation projected for the fourth quarter of 2025 and into 2026 [3]. Prior to the meeting, Russia pushed for the modest 137,000 bpd rise to prevent price pressures, while Saudi Arabia reportedly favored an increase that was double, triple, or even quadruple that amount to swiftly reclaim market share [4].

Recent Price Movements and Market Dynamics

Oil prices initially gained more than 1 percent on October 6 following the OPEC+ announcement, with Brent crude futures rising to $65.30 per barrel and WTI crude climbing to $61.59 [5]. The modest production increase provided temporary support as traders viewed the decision as evidence of producer discipline.

By October 7, both benchmarks maintained their gains, with Brent trading around $65.70 per barrel and WTI at $61.90 per barrel [6]. However, the rally proved short-lived as persistent concerns about oversupply and weak demand fundamentals continued to weigh on sentiment.

Sharp Decline on Geopolitical and Trade Developments

On October 10, oil prices experienced a steep collapse. WTI crude tumbled below the critical $60 per barrel mark for the first time since May, settling at $58.90 per barrel for a 4.24 percent loss [7]. Brent crude followed suit, closing down 3.82 percent at $62.73 per barrel [8].

The decisive collapse was driven by two major bearish factors. First, successful progress toward an Israel-Gaza ceasefire deal quickly erased a significant portion of the geopolitical risk premium that had supported prices [9]. Second, a sharp escalation in China-US trade tensions triggered by President Trump’s threats of new massive tariffs on Chinese imports and Beijing’s reciprocal port fees and rare earth curbs revived intense fears about curtailed global economic growth and crushed oil demand [10].

Supply Pressures and Demand Outlook

The modest OPEC+ production update arrives concurrently with increasing Venezuelan exports, the reinstatement of Kurdish oil shipments through Turkey, and a surplus of unsold barrels from the Middle East scheduled for November [11]. OPEC+ has raised its production targets by over 2.7 million bpd so far this year, equivalent to roughly 2.5 percent of global demand [12].

Regional Supply Disruptions Provide Limited Support

Additional support came briefly from supply risks after reports revealed that Ukraine’s drone attack on Russia’s Kirishi oil refinery over the weekend halted its most productive distillation unit [13]. Recovery could take about a month, temporarily tightening regional supply. However, this disruption proved insufficient to offset broader bearish pressures.

Fourth Quarter Forecast and Market Fundamentals

Analysts warn that weak demand fundamentals in the fourth quarter will limit any sustained price recovery. Brent crude oil is expected to trade around $64.14 per barrel by the end of this quarter, with forecasts of $69.22 in twelve months [14]. Moving averages indicate a short-term bearish trend, with prices breaking below signal lines and indicating downward pressure from sellers [15].

Persistent worries over a supply glut amid rising output from both OPEC+ and non-OPEC+ producers, combined with weak demand expectations, continue to cap the market’s upside [16]. Refinery maintenance seasons are expected to add to the decrease in demand through the winter months.

The oil market faces headwinds from the potential impact of escalating trade tensions on 2026 global trade, with all signs pointing toward continued pressure if the current pace of sanctions and reciprocal levies does not ease. The removal of geopolitical risk premiums following ceasefire progress has left crude prices vulnerable to demand-side concerns and oversupply fears heading into the final quarter of 2025.

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Editorial Timeline

Revisions
— by Elena Voren
Add SEO improvements
— by Nodin Laramie
  1. Complete article rewrite with current October 7-11, 2025 data
  2. Updated all oil price quotes to latest WTI and Brent figures
  3. Added Israel-Gaza ceasefire impact analysis
  4. Included Trump tariff threat and trade war implications
  5. Updated OPEC+ production decision details
  6. Added fourth quarter price forecasts and market outlook
  7. Rewrote opening paragraph in BLUF format
  8. Restructured content with H2 and H3 headings
  9. Added 16 secondary source citations
  10. Updated TL;DR section with current key points
  11. Created three new FAQs with detailed answers
  12. Updated excerpt meta description for SEO

Correction Record

Accountability
— by Nodin Laramie
  1. Original outdated oil prices replaced with current October 10, 2025 figures
  2. WTI price updated to $58.90 per barrel (October 10 close)
  3. Brent price updated to $62.73 per barrel (October 10 close)
  4. OPEC+ October meeting decision details added and verified
  5. Geopolitical risk premium removal from Gaza ceasefire added
  6. Trump tariff threat impact on global demand outlook added
  7. Russian refinery attack supply disruption details corrected
  8. Fourth quarter price forecast updated with latest analyst projections
  9. Supply glut concerns updated with current data
  10. Market outlook revised to reflect bearish sentiment

FAQ

Why did oil prices fall below $60 per barrel?

Oil prices dropped due to progress on an Israel-Gaza ceasefire deal that removed geopolitical risk premiums, combined with escalating China-US trade tensions triggered by President Trump's threatened tariffs on Chinese imports, which revived fears of reduced global economic growth and weakened oil demand.

What is the current oil price forecast for the fourth quarter?

Analysts expect Brent crude to trade around $64.14 per barrel by the end of this quarter, with twelve-month forecasts projecting $69.22. Moving averages indicate a short-term bearish trend, with prices breaking below signal lines as sellers continue exerting downward pressure on the market.

How did OPEC+ production changes affect the oil market?

OPEC+ announced a modest 137,000 barrels per day production increase for November, matching October's pace and below market speculation of a larger hike. Eight member countries including Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman participated in the decision, which initially supported prices but ultimately failed to offset broader bearish pressures from weak demand and oversupply concerns.