West Texas Intermediate (WTI) Oil has nearly reached $60.00 after a Ukrainian drone strike hit an oil depot at Russia’s Black Sea port in Novorossiysk. During Asian trading hours, WTI prices climbed over 2%, hitting around $59.90. Lukoil PJSC is reducing staff just days before new US sanctions, set to take effect on November 21. These events may leave about a third of Russia’s seaborne oil exports stranded due to delays in rerouting. Despite the increase in oil prices, there are concerns about potential oversupply. The International Energy Agency (IEA) warns that production could exceed demand by 2.4 million barrels this year and 4 million next year. OPEC and OPEC+ members, including Russia, have boosted production since April. Supply from the US and Brazil adds to oversupply worries. According to OPEC’s report, there could be a small surplus of around 20,000 barrels per day next year.

WTI as a Market Benchmark

WTI Oil is a key market benchmark, known for its light and sweet qualities. The price of oil depends on various factors, such as supply and demand, global economic growth, political events, and OPEC’s production decisions. Reports from organizations like the API and EIA also influence WTI prices. Changes in OPEC’s production quotas can lead to fluctuations in WTI prices. The drone strike on Russia’s Novorossiysk port has pushed WTI crude close to $60, presenting a short-term buying opportunity. This situation reflects similar supply disruptions from early 2024, which caused price spikes of 5-7% in the following weeks. This incident serves as a catalyst for price increases before fundamental factors take over. With new US sanctions on Russian oil effective November 21, supply pressure will likely rise significantly. Major buyers such as India and China are already halting their purchases, which could leave a substantial amount of crude stranded. This creates a genuine supply crunch, making call options with expirations in late November and early December particularly appealing to traders who anticipate rising risks.

Immediate Tension vs. Long-Term Pressure

Nevertheless, we must acknowledge the strong bearish factors looming ahead. The IEA projects a large supply glut of 4 million barrels per day by 2026. Recent data shows that US crude production recently hit a record 13.5 million barrels per day, which reinforces this trend. This clash between immediate geopolitical tension and long-term oversupply suggests we may face a period of high volatility. OPEC+ has been increasing production since April 2025, which weakens the cartel’s historical role in stabilizing prices. The interplay of short-term supply shocks and long-term surpluses has caused a 15% increase in implied volatility for oil options this week, making strategies like straddles appealing for trading expected price swings without committing to a specific direction. Create your live VT Markets account and start trading now.

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