Oil gained on Thursday as investors weighed concerns about global oversupply with looming sanctions against Russia’s Lukoil.
The price of the Brent crude grade chalked up 30 cents or 0.5 per cent to $63.01 a barrel, and the US West Texas Intermediate (WTI) crude increased by 20 cents or 0.3 per cent to $58.69 a barrel.
The US has imposed sanctions on Lukoil as part of its efforts to bring the Russian government to peace talks with Ukraine. The sanctions prohibit transactions with the Russian company after November 21.
According to JPMorgan, nearly a third of Russia’s current seaborne oil export potential is now stuck in tankers as the US sanctions upend crude flows and Russia’s top buyers, China and India, are still struggling to assess the implications of the sanctions.
“Russia’s oil exports are entering a new phase of disruption as sanctions targeting Rosneft and Lukoil are set to take effect, prompting its two largest customers — India and China — to sharply reduce their December purchases,” the Wall Street bank said in a note.
JPMorgan estimates that as many as 1.4 million barrels per day of Russian crude oil or nearly a third of its exporting potential are on tankers at present, amid re-routing and slowed unloading as buyers are hesitant following the US sanctions on Russia’s top oil producers and exporters, Rosneft and Lukoil.
Also, the US Energy Information Administration (EIA) showed a larger-than-expected rise in US crude stocks, while gasoline and distillate inventories fell less than expected last week. Crude inventories rose by 6.4 million barrels to 427.6 million barrels in the week ended November 7, the EIA said.
The Organisation of the Petroleum Exporting Countries (OPEC) said global oil supplies would slightly exceed demand in 2026, a further shift from the group’s earlier projections of a deficit.
It also said it expected the supply surplus next year because of wider production increases by OPEC+, a group of producers that includes OPEC members and allies like Russia.
The International Energy Agency (EIA) raised its global oil supply growth forecasts for this year and next in its monthly oil market report on Thursday, signaling a bigger surplus in 2026.
The US EIA also said in its Short-Term Energy Outlook on Wednesday that U.S. oil production is expected to set a larger record this year than previously forecast.
Global oil inventories will grow through 2026 as production increases faster than demand for petroleum fuels, adding to pressure on oil prices, the EIA added.