Oil Prices Continue to Find Support from Geopolitical Risks

Crude oil prices saw modest support on Monday, with December West Texas Intermediate futures rising by less than 0.1%, while gasoline prices slipped about 0.6%, as geopolitical risks continued to weigh on global markets.

Geopolitical tensions remain the primary driver of support for oil. Iran recently seized a tanker in the Gulf of Oman, while the United States has stepped up military preparations amid concerns of a potential attack on Venezuela, the world’s twelfth‑largest oil producer.

Ukraine has also intensified strikes on Russian energy infrastructure, hitting at least 28 refineries over the past three months. These attacks have reduced Russia’s seaborne fuel exports to 3.45 million barrels per day as of November 9, the lowest in two months, and disrupted between 13% and 20% of Russia’s refining capacity — up to 1.1 million barrels per day.

In addition, the U.S. and European Union have imposed new sanctions on Russian oil companies and tankers, adding further pressure on Moscow’s exports.

On the other hand, several factors are weighing on prices. OPEC revised its outlook for the global oil market in the third quarter from a deficit of 400,000 barrels per day to a surplus of 500,000 barrels per day, driven by higher US output and increased production from some member states.

The U.S. Energy Information Administration also raised its 2025 production forecast to 13.59 million barrels per day, up from 13.53 million barrels per day in last month’s estimate. Meanwhile, OPEC+ announced a production increase of 137,000 barrels per day in December, with plans to halt further increases in early 2026 due to expectations of a record global surplus of 4 million barrels per day by that year.

Recent data show U.S. crude inventories as of November 7 were 4.1% below the five‑year average, while gasoline stocks were down 4% and distillate stocks down 7.9%. At the same time, U.S. production climbed to a record 13.862 million barrels per day, with active oil rigs rising to 417.

Overall, crude prices are caught between the downward pressure of rising global supply and surplus expectations, and the strong support provided by geopolitical risks and Western sanctions — leaving the market in a fragile balance between supply and demand.

Russian Oil Moves in the Opposite Direction

Despite the factors supporting global oil prices, Russian crude has come under sharp pressure since the U.S. announced a new round of sanctions on its exports. The decline reflects decisions by China and India to scale back purchases following the latest punitive measures.

Urals crude, Russia’s main export blend, fell to $36.61 per barrel at the end of last week for cargoes loaded from Novorossiysk, according to Argus Media data cited by Bloomberg.

The discount to Brent widened to $23.51 per barrel, the largest since March 2023. Urals had typically traded at a discount of $12–13 before the sanctions, but the gap has nearly doubled and is approaching the early‑2023 record of $40.

Selling pressure has intensified ahead of the November 21 deadline, when all transactions involving Rosneft and Lukoil must be wound down.

China and India Halt Purchases

State‑owned Chinese refiners such as Sinopec and PetroChina, along with smaller private plants, have suspended direct purchases of Russian crude. This sudden drop in demand has left Russian suppliers holding growing volumes at sea.

Several major Indian refiners — including Reliance Industries, Bharat Petroleum, Hindustan Petroleum, Mangalore Refinery and Petrochemicals, and HPCL‑Mittal Energy — have also halted direct purchases. Together, these companies had previously imported around 1 million barrels per day of Russian crude.

JPMorgan estimates that roughly one‑third of Russia’s seaborne exports — about 1.4 million barrels per day — are now sitting on tankers being used as floating storage. Analysts at the bank wrote: “Russia’s oil exports are entering a new phase of disruption as sanctions targeting Rosneft and Lukoil take effect, prompting its two largest customers — India and China — to sharply reduce their December purchases.”