NEW YORK: Oil prices edged lower on Monday as analysts stuck to predictions that rising supply will outweigh demand in the months ahead, even if further sanctions against Russia curb exports from that country.
Brent crude futures fell 18 cents, or around 0.3percent, to USD63.45 a barrel by 11:11 a.m. ET (1611 GMT). US West Texas Intermedia-te crude dropped 21 cents, or 0.4 percent, to USD59.54 a barrel. Both benchmarks fell about 2percent last week, their second consecutive weekly decline, on expectations that crude oil supply will exceed demand in the months ahead due to higher OPEC+ production and record US output. Doubts over the effectiveness of the latest US sanctions against Russia are also weighing on crude prices.
“Although the US has stepped up direct sanctions on Russian oil producers Rosneft and Lukoil, it’s not clear how effective they will be in limiting Russian exports,” independent energy analyst Tim Evans said. This month OPEC+, the Organization of the Petroleum Exporting Countries and allied producers, agreed to increase output slightly in December.
While the group also paused further hikes in the first quarter, that may not limit supplies enough to support prices. “Even with the prospect of reduced Russian supply and the 1Q26 freeze on OPEC+ production quotas, the global crude oil market may run a smaller supply/demand surplus rather than a more supportive deficit,” Evans said.
RISE Crude inventories are also on the rise in the US while the volume of oil stored aboard ships in Asian waters has doubled in recent weeks after tightening Western sanctions curtailed imports into China and India.
The oil market is split between rising volumes of crude stored at sea weighing on oil prices and limited availability of Russian products sustaining fuel prices, PVM’s Varga said. Russian oil producer Lukoil has declared force majeure at Iraq’s giant West Qurna-2 oil field, four sources with knowledge of the matter said on Monday, after Western sanctions on the Russian oil major hampered its operations. Lukoil’s operations faced mounting disruptions as a US deadline for companies to cut off business with the Russian company looms on November 21 and after an agreement to sell the operations to Swiss trader Gunvor collapsed.
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