Oil prices climbed on Tuesday, supported by continued fallout from new U.S. sanctions on Russian energy firms and optimism surrounding progress to end the U.S. government shutdown. Gains, however, remained limited by expectations of persistent oversupply. Brent crude settled $1.10 higher at $65.16 a barrel, up 1.7%, while WTI rose $0.91 to $61.04, up 1.5%.
The market found support as traders digested the impact of Washington’s sanctions against Russia’s top oil producers, Lukoil and Rosneft, which have already begun disrupting flows of both crude and refined fuels. Analysts noted that fuel markets are showing greater strength than crude as product exports from Russia slow under sanctions pressure.
Lukoil’s declaration of force majeure at Iraq’s West Qurna-2 oilfield marked the most visible consequence of the sanctions so far, further clouding supply expectations. With Russian barrels under growing strain, refiners in India have begun shifting away from Russian purchases in favor of Middle Eastern supplies. Sources at several major Indian refiners confirmed increased allocations from Saudi Arabia, Iraq, and Kuwait beginning in December.
Markets also drew some strength from signs that the U.S. government shutdown — the longest in American history — may soon end. The Senate approved a compromise funding measure expected to reach the House floor on Wednesday. Analysts said hopes of reopening federal operations improved risk sentiment and boosted expectations for near-term demand recovery.
Still, worries about a growing crude surplus tempered gains. OPEC+ is set to raise output by 137,000 barrels per day in December, though the group plans to pause further increases during the first quarter of 2026. Several analysts cautioned that production growth from both OPEC+ and non-OPEC producers could leave the global market in surplus through next year.
“Even with sanctions and short-term supply disruptions, the broader balance still looks heavy,” Commerzbank analysts wrote, noting that OPEC+ could add another million barrels per day to the market after the pause.