Oil prices rebound as markets weigh Russia sanctions, oversupply
Investing.com-- Oil prices rebounded from a three-week low in Asian trade on Friday recouping a bulk of their weekly losses as markets bet that strict U.S. sanctions on Russia will help offset a looming supply glut.
The reopening of the U.S. government, after a nearly 43-day shutdown, also helped crude, as markets looked to an improvement in U.S. fuel demand.
But persistent concerns over a 2026 supply glut, coupled with data showing a bigger-than-expected build in U.S. inventories, limited any major upside in crude.
Brent oil futures for January jumped 1.1% to $63.65 a barrel, while West Texas Intermediate crude futures rose 1% to $59.24 a barrel by 20:08 ET (01:08 GMT).
Oil’s rebound was driven by some bets that recent U.S. sanctions against Russia’s largest oil firms will spur some disruptions in oil supplies.
The U.S. Treasury had in late-October announced sanctions against Russia’s Rosneft and Lukoil, which are now set to take effect from November 21.
Both companies were seen scaling back several operations in anticipation of the deadline, with the sanctions expected to further crimp Russia’s ability to sell oil. The sanctions are aimed largely at pressuring Moscow into a ceasefire with Ukraine, although little progress has been made on that front.
Brent and WTI futures were trading flat this week, having earlier fallen to three-week lows.
Declines in crude were driven chiefly by concerns over a supply glut in 2026. These came to a head on Wednesday following a bearish report from the Organization of Petroleum Exporting Countries, which showed the cartel forecasting a small surplus next year.
The OPEC had until Wednesday maintained a positive outlook on markets going into 2026. But a shift in the cartel’s stance rattled oil markets, sending prices lower by about 4% on Wednesday.
Adding to fears of oversupply, the International Energy Agency said on Thursday forecast an even larger supply glut next year, citing increased production by the OPEC and other countries.
The IEA also warned that demand growth is expected to slow amid rising economic uncertainty across the globe.
