Oil prices increased on Monday due to optimism surrounding the potential resolution of the U.S. government shutdown, which could enhance demand in the world’s largest oil-consuming nation. By 0916 GMT, Brent crude futures rose by 50 cents to $64.13 a barrel, while U.S. West Texas Intermediate crude gained 53 cents, reaching $60.28 a barrel. The U.S. Senate’s progress on measures to reopen the federal government after a 40-day shutdown helped restore market confidence, according to PVM analyst Tamas Varga.
Despite this positive news, analysts expressed concerns about the impact of widespread flight cancellations on U.S. jet fuel demand, as airlines canceled over 2,800 flights and delayed more than 10,200 on Sunday. Last week, both Brent and WTI experienced declines of about 2%, driven by fears of a supply surplus. OPEC+ has decided to slightly increase output in December while pausing further hikes for the first quarter, amid rising crude inventories in the U.S.
Additionally, the volume of oil stored on ships in Asian waters has doubled recently, partly due to tightened Western sanctions affecting imports to China and India. The situation has created a disconnect between increasing oil storage at sea and the limited availability of Russian products. Russia’s Tuapse oil refinery has suspended fuel exports following drone attacks, further complicating the supply landscape. Lukoil, a major Russian oil producer, faces disruptions as it approaches a U.S. deadline for severing business ties, following the collapse of a sale to Swiss trader Gunvor.