The oil market is expected to finish lower this week as traders analyze the effects of US sanctions on Russian oil supplies. There is skepticism about a significant cut in Russian oil flow. OPEC+ is likely to approve an increase of 137,000 barrels per day for December. This comes amid ongoing talks between US and Chinese leaders, where Russian oil exports to China were reportedly not discussed. China, which imports 2 million barrels per day from Russia, may boost its purchases if India lowers its imports.

OPEC+ Supply Decision

The expected OPEC+ decision might heighten market concerns about a major surplus through 2026. Sanctions on Russia play a crucial role here, as disruptions in supply could alter market expectations. Middle distillate markets are currently stable, with uncertainty surrounding Russian diesel sanctions keeping prices elevated. The ICE gasoil crack remains near $30 per barrel following a substantial increase since mid-October. In the ARA region, gasoil inventories grew by 109,000 tonnes week-on-week, widening the gap compared to the 5-year average. Meanwhile, Singapore’s middle distillate stocks fell by 6.25 million barrels last week. The outlook for crude oil appears weak as we enter the final months of 2025. Price trends indicate doubt that US sanctions will significantly affect Russian oil flow. The recent meeting between President Trump and President Xi suggests that China’s imports of about 2 million barrels per day are stable for now. This Sunday’s OPEC+ meeting is expected to add another 137,000 barrels per day to the market for December. This could further pressure prices, contributing to a growing surplus expected to last into 2026. Recent data reveals global oil inventories have risen by over 30 million barrels in the last month, indicating the surplus.

Market Strategies and Inventory Insights

Given this, traders might consider selling crude futures or buying put options to prepare for a potential price drop. Unlike the panic of 2022 when Brent crude prices soared past $120, the market now seems more relaxed about supply concerns. Recent data shows Russian seaborne exports hitting a post-sanction high of 3.7 million barrels per day, further supporting this bearish sentiment. However, refined products like diesel and gasoil present a different scenario. Ongoing uncertainty regarding Russian diesel exports keeps middle distillate prices strong. The ICE gasoil crack is stable around $30 per barrel, a level not consistently seen since early 2024. Inventory data shows mixed results, with stockpiles in Europe’s ARA hub recently increasing by 109,000 tonnes, while Singapore stocks dropped by 6.25 million barrels. The latest EIA report indicated a surprising decrease in US distillate inventories, keeping the market tight. This divergence suggests that taking long positions in distillate cracks—buying gasoil futures and selling crude futures—could be a smart strategy in the coming weeks. Create your live VT Markets account and start trading now.

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