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Oil prices slipped on Friday, setting the stage for a third consecutive monthly decline as a stronger dollar and robust global output weighed on investor sentiment. 

The market’s downward momentum reflected persistent concerns that surging supply from key producers is overshadowing the impact of Western sanctions on Russian exports, reported Reuters.

Brent crude futures fell 33 cents, or 0.51 per cent, to $64.67 a barrel in early trading today. Meanwhile, US West Texas Intermediate (WTI) crude was down 35 cents, or 0.58 per cent, at $60.22 a barrel.

"A stronger USD weighed on investor appetite across the commodities complex," analysts at ANZ noted, pointing to the Federal Reserve’s hawkish tone as a key factor. The dollar firmed after Fed Chair Jerome Powell signalled that a December rate cut was not assured, damping demand for dollar-priced commodities such as oil.

Third Month of Losses Amid Supply Surge

Both Brent and WTI are on track to lose about 3 per cent in October, with analysts highlighting that the rise in supply from the Organisation of the Petroleum Exporting Countries (OPEC) and other major producers could surpass demand growth through the year.

Sources familiar with discussions within OPEC+ revealed in the report that the alliance is leaning toward a modest output increase in December. The group, which brings together OPEC and its allies, including Russia, has already expanded production targets by more than 2.7 million barrels per day (bpd), around 2.5 per cent of total global supply, through a series of monthly hikes.

The surge in production is expected to cushion the effects of Western sanctions that have disrupted Russian oil exports to major Asian markets such as China and India. Even as sanctions bite, alternative supply sources have stepped in to stabilise the market.

Saudi and US Output Hit Record Levels

Saudi Arabia, the world’s top oil exporter, has seen crude exports climb to their highest level in six months. According to the Joint Organisations Data Initiative (JODI), the kingdom shipped 6.407 million barrels per day in August, with volumes expected to rise further.

Across the Atlantic, US production is also hitting record highs. Data from the Energy Information Administration (EIA) showed that American oil output reached a new peak of 13.6 million bpd last week. This surge underscores the continuing strength of the US shale industry, which has played a central role in reshaping the global energy balance.

Uncertainty Over US-China Energy Talks

On the geopolitical front, US President Donald Trump announced on Thursday that China had agreed to begin purchasing American energy products, suggesting a potentially large-scale deal involving oil and gas from Alaska. However, market observers remain cautious about the actual impact of such agreements on Chinese demand.

Barclays analyst Michael McLean expressed doubt that the initiative would materially alter trade flows. “Alaska produces only 3 per cent of total US crude oil output (not significant), and we think Chinese purchases of Alaskan LNG likely would be market driven,” he wrote in a client note.