Brent remains supported as supply risks intensify

The front-month ICE Brent contract has inched $0.03/bbl higher on the day, to trade at $63.98/bbl at 09.00 GMT.

IMAGE: Getty Images

Upward pressure:

Oil prices have gained support amid concerns over potential supply disruptions in the global market.

Russian oil company Lukoil has declared force majeure at its 400,000 b/d West Qurna-2 oilfield in Iraq, following sanctions imposed by the US and the UK, Reuters reported, citing sources.

In October, the US Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned Rosneft and Lukoil, along with 34 of their subsidiaries.

Rosneft and Lukoil are Russia’s two largest oil producers, accounting for around 50% of the country’s total oil production.

Following Washington’s move, Iraq has stopped all cash and crude payments to Lukoil, Reuters added. 

“The announcement by the US of sanctions on two Russian oil producers has created more supply uncertainty in the oil market,” remarked ING Bank’s head of commodities strategy Warren Patterson.

Downward pressure:

Brent’s price gains have been limited due to lingering concerns over an oversupplied market this year and into early 2026.

OPEC+ producers have agreed to collectively increase their production by another 137,000 b/d in December.

“The glut of oil triggered by rising OPEC supply has seen investors become increasingly bearish in recent weeks,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

By Aparupa Mazumder

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