Russian Oil Supply Faces New Risks
The global oil market has faced downward pressure this week as traders assess the impact of new United States sanctions on Russian oil exports. Despite these sanctions, price action suggests that the market remains unconvinced that a significant volume of Russian oil supply will be lost. ING commodity analysts Ewa Manthey and Warren Patterson note that this uncertainty continues to shape market sentiment.
OPEC+ is scheduled to meet on Sunday, and forecasts suggest the group is likely to approve a 137,000 barrels per day increase in supply for December. This decision comes amid expanding United States sanctions on Russia, and the ambiguity surrounding their full impact has created momentum for additional supply.
However, such a move may reinforce the bearish outlook for the market, especially given the substantial surplus projected through 2026—unless a supply shock emerges from Russia.
In a recent meeting between the President of the United States and the President of China, Russian oil flows to China were reportedly not part of the broader discussions. This is significant for the market, as China imports approximately 2 million barrels per day of Russian crude, making it the only country capable of meaningfully increasing purchases should India reduce its intake.
Middle distillate cracks remain well supported, with ICE gasoil holding around $30 per barrel, following a strong rally since mid-October.
According to Insights Global, gasoil inventories in the Amsterdam–Rotterdam–Antwerp (ARA) region rose by 109,000 tons week-over-week to 2.27 million tons, widening the gap with the five-year average. In Singapore, after a significant build in middle distillate stocks the previous week, inventories declined by 6.25 million barrels over the past week.
In summary, the oil market is navigating a complex mix of geopolitical factors, OPEC+ decisions, and regional inventory shifts. While a December supply increase appears likely, downward pressure from oversupply and uncertainty around sanctions continues to weigh on sentiment.