Crude Oil Prices Drop Nearly 8% This Week Due to US Shutdown and Oversupply Worries

Crude oil prices in Asia rose on Friday, bouncing back after hitting more than four-month lows in the previous session. Brent futures for December delivery gained 0.5% to US$64.44 per barrel, while West Texas Intermediate (WTI) crude rose 0.5% to US$60.80 per barrel. Despite this recovery, both benchmarks remained set for a steep weekly decline of nearly 8%.

OPEC+ Plans to Raise Output

The main reason for the pressure on prices is oversupply concerns. Reports suggested that OPEC+ may increase production by as much as 5,00,000 barrels per day in November, triple the rise seen this month. According to a Reuters survey, the group’s output already rose by 3,30,000 bpd in September to 28.40 million bpd.

Saudi Arabia and other members are trying to regain market share. However, too much supply could worsen the situation, as demand is already slowing. Seasonal refinery maintenance and weaker global growth are also dragging on oil consumption.

OPEC+ ministers are scheduled to meet on October 5 to decide on the November plan. Any signals of bigger or faster output hikes could lead to further drops in prices.

Impact of U.S. Government Shutdown

In addition to supply concerns, oil demand is under pressure from political uncertainty in the United States, where a federal government shutdown entered its third day. Around 800,000 government workers have been furloughed, and important economic data such as jobs and inflation reports are on hold. This makes it harder for markets to gauge U.S. consumption trends and Federal Reserve policy.

Past shutdowns show the economic impact can be severe. The 2018-19 shutdown, the longest in history, lasted 34 days and cost the economy US$11 billion, with US$3 billion never recovered. The 2013 shutdown caused over 6.5 million lost workdays, billions in lost productivity and output, and delayed tax refunds. Such disruptions hurt household spending and business confidence, which in turn weakens fuel demand.

Read more: Stocks to Watch on October 3, 2025: Hero MotoCorp, Waaree Energies, and TVS Motor, Among Others.

Conclusion

Crude oil prices managed to recover slightly on Friday, but oversupply risks from OPEC+ and concerns over the U.S. shutdown are likely to weigh on the market. Unless demand picks up, any further increase in production could push prices lower, keeping crude under pressure in the weeks ahead.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.