On Tuesday,11th November, oil prices remained stable as investors weighed oversupply worries against the implications of recent U.S. sanctions on Russian oil. By 0922 GMT, Brent crude futures increased by 27 cents to $64.33 per barrel, while U.S. West Texas Intermediate crude rose by 26 cents to $60.39 per barrel. The market is currently assessing how these sanctions affect both crude and refined fuel sectors, particularly after Lukoil declared force majeure at an Iraqi oil field, marking a significant consequence of the sanctions.
According to PVM analyst Tamas Varga, restricted fuel exports due to the sanctions are helping support oil prices, even in the face of an oversupply in the market. He noted that new U.S. sanctions on major Russian oil producers are causing discrepancies in the markets for heating oil and gasoline compared to crude oil. European diesel refining margins have soared to nearly $31 per barrel, and gasoline profit margins reached their highest in 18 months at almost $21 per barrel.
However, concerns about excess crude supply persist, as analysts from Ritterbusch and Associates mentioned that increasing OPEC production is contributing to a bearish outlook for global oil balances amid declining demand linked to slowed economic growth in major consuming countries. Earlier this month, OPEC+ raised December output targets by 137,000 barrels per day but opted to pause further increases in the upcoming quarter.
Additionally, the amount of oil stored on ships in Asian waters has surged, indicating weakened exports to China and India due to tightening sanctions. In the broader market, optimism grew as the longest U.S. government shutdown could soon end after the Senate approved a funding compromise.