Oil prices increased on Tuesday due to the latest U.S. sanctions on Russian oil and optimism surrounding a potential end to the government shutdown. Brent crude futures rose by $1.14 to $65.20 a barrel, while U.S. West Texas Intermediate crude climbed $1.03 to $61.16. However, concerns about oversupply continued to limit price gains.
Investors are closely monitoring the implications of U.S. sanctions on both crude oil and refined fuel markets. Notably, Lukoil declared force majeure at an Iraqi oilfield, highlighting the sanctions’ impact. According to PVM analyst Tamas Varga, restricted fuel exports are supporting oil prices despite a prevailing crude glut.
In response to the sanctions, Middle Eastern producers like Saudi Arabia and Iraq plan to increase oil supplies to India, as Indian refiners seek alternatives to Russian barrels. Additionally, the potential resolution of the government shutdown has raised demand expectations, according to Price Futures Group analyst Phil Flynn.
Despite these factors, worries about oversupply persist, particularly following OPEC+’s decision to increase December output targets. Analysts at Commerzbank noted that the oil market is facing significant oversupply, likely keeping prices under pressure in the coming year.
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