Sanctions outlook lifts Brent’s price
The front-month ICE Brent contract has gained by $0.45/bbl on the day, to trade at $64.56/bbl at 09.00 GMT.
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Upward pressure:
Recent sanctions on Russia’s energy sector have supported Brent’s price this week.
The US Treasury Department’s Office of Foreign Assets Control (OFAC) had sanctioned Rosneft and Lukoil along with 34 of their subsidiaries in October.
Lukoil and Rosneft are Russia’s two biggest oil producers, according to market analysts. The sanctions have helped ease some market concerns about a potential supply glut anticipated in 2026.
“Given recent US sanctions on Russia, there is plenty of uncertainty as to the size of this surplus,” two analysts from ING Bank said. “If these sanctions disrupt Russian oil flows, it will eat into the expected surplus early next year,” they added.
Downward pressure:
Brent’s price has come under some downward pressure after the American Petroleum Institute (API) reported a sizeable increase in US crude stocks.
US crude oil inventories gained by 6.5 million bbls in the week ending 31 October, according to API estimates.
A build in US crude stocks typically indicates lower demand for oil and can cap Brent's price gains.
“Downward pressure [on Brent] continued in early morning trading today, following a bearish inventory report from the American Petroleum Institute (API),” ING Bank’s analysts noted.
The widely watched official data from the US Energy Information Administration (EIA) is scheduled for release later today.
By Aparupa Mazumder
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