Oil prices saw a modest increase on Thursday, supported by easing fears of a potential supply glut amid the impact of sanctions on Russian oil companies. By 1120 GMT, Brent crude futures rose by 35 cents, or 0.6%, to $63.87 a barrel, while U.S. West Texas Intermediate futures climbed 39 cents, or 0.7%, to $59.99. The recent sanctions imposed on Russia’s major oil firms have raised concerns about supply disruptions, despite ongoing increases in production from OPEC and its allies.
Analysts noted that while the sanctions are affecting operations at companies like Lukoil, the overall impact on prices has been limited. Jorge Montepeque from Onyx Capital Group remarked that the market remains cautious about the potential effects of these sanctions. Global oil prices have been on a downward trend for three consecutive months, largely due to fears of oversupply as both OPEC and non-OPEC producers continue to boost output.
The decision by the broader OPEC+ group to pause further production increases in the first quarter of the next year has helped alleviate some oversupply concerns. However, weak demand continues to be a significant factor, with global oil demand rising by only 850,000 barrels per day, falling short of earlier projections by J.P. Morgan. High-frequency indicators suggest subdued U.S. oil consumption, reflecting weak travel activity and reduced container shipments.
The U.S. Energy Information Administration recently reported a rise in U.S. crude stocks by 5.2 million barrels, contributing to downward pressure on prices. Analysts from Capital Economics forecast that oil prices will likely trend lower, estimating an end-of-2025 price of $60 per barrel and $50 per barrel by the end of 2026. Additionally, Saudi Arabia has lowered its crude prices for Asian buyers in response to the well-supplied market, further indicating the challenges facing oil prices.