Insights 
VT 
The oil market is projected to finish lower this week as participants assess the impact of US sanctions on Russian oil flows. The market remains sceptical about a large reduction in Russian oil supply.
OPEC+ is expected to approve a supply increase of 137,000 barrels per day for December. This is in light of the ongoing discussions involving US and Chinese leadership, where Russian oil exports to China were reportedly not a part of the conversation. China, importing 2 million barrels per day of Russian oil, could increase purchases if India reduces its imports.
OPEC+ Supply Decision
The anticipated OPEC+ decision is expected to support the market’s concerns about a substantial surplus through 2026. Sanctions on Russia remain a key factor in this decision, as supply disruptions could change the market outlook.
Middle distillate markets are experiencing support, with uncertainty over Russian diesel sanctions keeping prices high. The ICE gasoil crack remains around $30 per barrel following a significant rally since mid-October. In the ARA region, gasoil inventories rose by 109,000 tonnes week-on-week, widening the gap with the 5-year average. Singapore’s middle distillate stocks declined by 6.25 million barrels in the last week.
The outlook for crude oil appears bearish as we head into the final months of 2025. Price action suggests we are not convinced that US sanctions will significantly disrupt the flow of Russian oil. The recent meeting between President Trump and President Xi seems to confirm that China’s imports of around 2 million barrels per day are secure for now.
This Sunday’s OPEC+ meeting is widely expected to add another 137,000 barrels per day to the market for December. This move will likely pressure prices further, contributing to a growing supply surplus that we project to last through 2026. This surplus is becoming more evident, with recent data showing global oil inventories rising by over 30 million barrels in the last month.
Market Strategies and Inventory Insights
Considering this, traders might look at selling crude futures or buying put options to position for a potential price decline. Unlike the initial panic we saw in 2022 when Brent crude shot past $120, the market now seems much more complacent about supply risks. Recent data showing Russian seaborne exports hitting a post-sanction high of 3.7 million barrels per day further supports this bearish view.
However, the situation with refined products like diesel and gasoil is different. Lingering uncertainty over Russian diesel exports is keeping middle distillate cracks well-supported. The ICE gasoil crack is holding firm around $30 a barrel, a level we haven’t consistently seen since the volatility of early 2024.
Inventory data is sending mixed signals, with stockpiles in Europe’s ARA hub recently rising by 109,000 tonnes. In contrast, Singapore stocks fell sharply by 6.25 million barrels, and the latest EIA report showed a surprise draw in US distillate inventories, keeping the market tight. This divergence suggests that long positions in distillate cracks, buying gasoil futures while selling crude futures, could be a compelling strategy in the coming weeks.
