International oil prices fell by about 2% on Monday (December 8), marking the largest single-day drop in nearly three weeks. The main reason behind this decline was the resumption of production at a large oil field in Iraq, intensifying concerns about global oversupply.
As a result of the weak international oil prices, the average gas prices in the United States also declined, dropping below $2.90 per gallon, reaching the lowest point since May 2, 2021.
On Monday, Brent crude futures prices fell by 1.98%, settling at $62.49 per barrel. The price of U.S. West Texas Intermediate (WTI) crude oil dropped by 2%, to $58.88 per barrel.
The direct cause of the price plunge was the resumption of production at the West Qurna 2 oil field in Iraq. The field has a daily production capacity of about 460,000 barrels, accounting for approximately 0.5% of global supply, and had been previously shut down due to a leak in an export pipeline. Two Iraqi energy officials confirmed to Reuters that the field had resumed normal output.
In addition to the increase in supply, investors are also weighing the progress of peace talks in Ukraine. ANZ analysts pointed out that the latest ceasefire initiative by President Trump could lead to daily fluctuations of over 2 million barrels of oil supply. If an agreement is reached in the near future, Russian oil exports may increase, putting downward pressure on oil prices.
Besides the international market, gas prices in the U.S. have fallen to a nearly five-year low.
According to GasBuddy’s data, as of December 8, the average price of regular gas in the U.S. was $2.897 per gallon, the lowest in 1,680 days.
Patrick De Haan, head of petroleum analysis at GasBuddy, stated that the drop in gas prices is mainly related to global oil price trends, increased production after refinery maintenance, and reduced seasonal demand. De Haan mentioned that there are already “dozens of gas stations” across the U.S. offering gas for less than $2 per gallon, with this number likely to increase further as the holiday season progresses.
The International Energy Agency (IEA) has forecasted that there will be a record surplus in supply next year.
Warren Patterson, Head of Commodities Strategy at ING Groep NV, stated, “The surplus in the oil market is expected to further expand in 2026, with supply exceeding demand by over 2 million barrels per day.”
ING predicts that assuming Russian oil flows remain unaffected by U.S. sanctions, the average annual price of Brent crude will be around $57 per barrel.
Traders are closely monitoring several key reports set to be released this week to assess the supply-demand balance. The U.S. Energy Information Administration’s Short-Term Energy Outlook is scheduled for release on Tuesday, while reports from the International Energy Agency and the Organization of the Petroleum Exporting Countries (OPEC) are expected later this week.