Onome Amuge
Oil prices drifted lower on Monday, as analysts warned that rising supply from Opec+ producers and record US output are likely to outpace global demand in the coming months, despite renewed sanctions and pressure on Russian exports.
Brent crude futures slipped 18 cents, or 0.3 per cent, to $63.45 a barrel, while US benchmark West Texas Intermediate fell 21 cents, or 0.4 per cent, to $59.54. Both contracts lost about 2 per cent last week , their second consecutive weekly decline, amid growing expectations of a supply surplus through early 2026.
Doubts persist over the effectiveness of Washington’s latest sanctions against Russian producers Rosneft and Lukoil, introduced to curb Moscow’s energy revenues. “Although the US has stepped up direct sanctions on Russian oil producers, it’s not clear how effective they will be in limiting exports,” said Tim Evans, an independent energy analyst.
Earlier this month, Opec and its allies agreed to an output increase for December but opted to pause further hikes in the first quarter of 2026. Analysts, however, believe the restraint is unlikely to offset the broader rise in supply. “Even with reduced Russian exports and an Opec+ freeze in the first quarter, the market may move to a smaller surplus rather than the deficit needed to support prices,” Evans added.
Rising US crude inventories have reinforced bearish sentiment, while the volume of oil stored at sea in Asian waters has roughly doubled in recent weeks as tighter Western sanctions disrupted shipments to China and India.
“The market is torn between rising seaborne storage volumes, which pressure crude prices, and limited Russian product availability, which supports refined fuel prices,” said Tamas Varga, an analyst at PVM Oil Associates.
In a further sign of stress, Russian producer Lukoil has declared force majeure at Iraq’s giant West Qurna-2 oilfield, according to people familiar with the matter. Operations have been hampered by sanctions and the collapse of a planned sale to Swiss trader Gunvor, ahead of a November 21 US deadline for companies to sever business ties with the Russian group.
Meanwhile, political developments in Washington added a note of optimism to broader markets. The US Senate on Sunday advanced a measure to reopen the federal government after a 40-day shutdown that has disrupted air travel, delayed welfare payments, and hit consumer sentiment.
Varga said progress in resolving the shutdown briefly lifted risk appetite among investors, though prolonged flight cancellations (more than 2,800 on Sunday alone), could weigh on jet fuel demand in the weeks ahead.
Oil windfall expectations from the Middle East crisis