LONDON: Oil prices climbed on Tuesday following the impact of the latest U.S. sanctions on Russian oil, although worries about global oversupply limited further gains.
Brent crude futures increased by 67 cents, or 1.1%, to $64.73 a barrel at 1333 GMT, while U.S. West Texas Intermediate (WTI) crude rose 65 cents, or 1.1%, to $60.78 a barrel.
Investors continue to evaluate the implications of U.S. sanctions on Russia and their effects on crude oil and refined fuel markets. Lukoil recently declared force majeure at an Iraqi oilfield it operates, marking the most significant disruption yet from last month’s sanctions, Reuters reported.
PVM analyst Tamas Varga noted that restricted fuel exports due to sanctions are supporting oil prices amid a glut of crude. “Fresh U.S. sanctions on major Russian oil producers and exporters are weighing on product exports. As a result, heating oil, gasoil, and RBOB gasoline are moving differently from crude,” he said.
European diesel futures rose to a 21-month high of over $31.50 per barrel above Brent crude on Tuesday, while European gasoline profit margins reached nearly $21 per barrel on Monday, the highest in 18 months.
Despite these gains, concerns about crude oversupply are limiting price increases. Earlier this month, OPEC+ agreed to raise December production targets by 137,000 barrels per day but paused further increases in the first quarter of next year. Commerzbank analysts highlighted that the oil market faces significant oversupply in the coming year due to output expansions by OPEC+, which has added 2 million bpd since April. A willingness to reverse voluntary cuts after the pause could add another 1 million bpd.
Additionally, oil stored on ships in Asian waters has doubled in recent weeks after tightened Western sanctions disrupted exports to China and India, analysts said.
Broader markets received some support as the longest U.S. government shutdown in history could end this week, with the Senate approving a compromise to restore federal funding, adding a positive note for investor sentiment.
