WTI rises to near $60.00 on supply risks due to US sanctions

• WTI price gains ground as Lukoil PJSC reduced staff just days before new US sanctions take effect on November 21.

• Russia’s Oil exports may become stranded amid rerouting delays, worsened by India and China halting Russian crude purchases.

• Oil prices may stay under pressure as the IEA warned of an expanding global supply glut.

West Texas Intermediate (WTI) Oil price gains for the second successive session, trading around $59.90, up by more than 2%, during the Asian hours on Friday. Crude Oil prices receive support from supply risks linked to upcoming United States (US) sanctions.

Lukoil PJSC has started reducing staff across its global oil-trading units just days before new sanctions take effect on November 21, making it one of the first visible signs of the coming restrictions. Analysts added that nearly a third of Russia’s seaborne oil exports could end up stranded in tankers because of rerouting and slower unloading, a problem intensified by India and China halting purchases of Russian crude.

However, Oil prices may continue to face challenges as bearish pressure persists after the International Energy Agency (IEA) flagged a widening supply glut, projecting output to exceed demand by 2.4 million barrels per day this year and 4 million next year, even as it expects consumption to keep rising through 2050.

The Organization of the Petroleum Exporting Countries and its allies including Russia, known as OPEC+, which has been increasing production since April, and additional supply from the US and Brazil are further amplifying oversupply concerns and dragging prices lower. OPEC’s latest monthly report pointed to a modest surplus of about 20,000 bpd next year, still a sharp pullback from earlier expectations of a significant deficit, according to Reuters calculations.