Oil Prices Recover from Lowest Level in 16 Weeks Supported by Sanction Expectations on Russia
Global oil prices saw a notable recovery on Thursday, ending a three-day losing streak and rising from their lowest levels in about four months. This increase came amid growing expectations of tighter Western sanctions on Russian oil, which provided a key support for prices, despite pressures from expectations of increased oil supply from the "OPEC+" alliance next month.
As of 01:16 GMT, Brent crude futures rose by 15 cents (equivalent to 0.2%), settling at $65.50 per barrel. Meanwhile, U.S. West Texas Intermediate crude futures also increased by 14 cents (0.2%), bringing its price to $61.92 per barrel.
This recovery follows a previous trading session where both crude types fell by about 1%, with Brent dropping to its lowest level since June 5, and West Texas Intermediate reaching its lowest price since May 30.
Hiroyuki Kikukawa, senior analyst at "Nissan Securities Investment", commented on this performance, stating: "Buying interest emerged as West Texas crude approached the $60 level, and the increasing geopolitical risks and speculation about tightening sanctions on Russian crude provided additional support for prices."
These speculations were reinforced after G7 finance ministers confirmed yesterday their intention to take steps to increase pressure on Russia by targeting entities that continue to purchase Russian oil or assist in evading sanctions.
Additionally, news reports added another supporting factor, as the "Wall Street Journal" reported that the United States would provide Ukraine with intelligence to guide long-range missile strikes on Russian energy infrastructure, including refineries and pipelines, in an effort to deprive Moscow of oil revenues.
On the other hand, Kikukawa pointed out factors that limited the extent of gains, stating: "Concerns related to the government shutdown in the United States, along with expectations of increased production from the 'OPEC+' alliance, pressured sentiment and limited price gains."
These expectations were bolstered after three sources revealed the possibility of the "OPEC+" alliance agreeing in its next meeting to increase oil production by up to 500,000 barrels per day in November, a rise that is three times the planned increase in October. Sources suggest that this increase comes as part of Saudi Arabia's efforts to regain its market share, despite signs of declining demand from the U.S. and Asia.
In a related context, data released by the U.S. Energy Information Administration yesterday added further pressure. The data showed an increase in crude oil, gasoline, and distillate inventories last week, alongside a decline in refining activity and demand.
Specifically, crude oil inventories rose by 1.8 million barrels to reach 416.5 million barrels in the week ending September 26, exceeding analysts' expectations in a "Reuters" survey, which had indicated an increase of only one million barrels.
