WTI rallies amid record Iraqi exports, US sanctions

• WTI rallied close to $62, whereas the market is stuck below $62.50 for October.
• Record Oil exports from Iraq and ongoing US sanctions on Russian producers are reshaping supply expectations.
• Hopes of a US-China trade deal sustain sentiment and limit further downside in Oil prices.

West Texas Intermediate (WTI) US Oil trades around $61.70 on Monday at the time of writing, up 0.65% on the day. The market consolidates after a volatile end to last week, when prices briefly surpassed $62 before easing, continuing a consolidation below the $62.50 level since the beginning of October.

Oil traders are reacting to reports from Iraq's Oil Ministry confirming record crude exports above 102 million barrels in September. The announcement raised concerns about potential oversupply within the Organization of the Petroleum Exporting Countries and its allies (OPEC+), even as Baghdad negotiates adjustments to its production quota.

At the same time, the United States (US) has introduced sweeping sanctions against Russia's leading Oil companies, Lukoil and Rosneft. According to Société Générale analysts, these measures, which freeze assets and ban transactions with US entities, could significantly reduce Russian supply, partially offsetting the impact of higher Iraqi output and helping stabilize prices. "This marks the most forceful action Washington has taken against Russian businesses since the invasion of Ukraine", noted the analysts.

On the demand side, optimism surrounding renewed dialogue between US President Donald Trump and Chinese President Xi Jinping is providing support to the Crude Oil market. The two leaders are expected to meet later this week to finalize a preliminary trade agreement aimed at avoiding new tariffs and maintaining the flow of key materials between the world's largest economies.

US Treasury Secretary Scott Bessent indicated that recent negotiations during the Association of Southeast Asian Nations (ASEAN) summit were "fruitful," while confirming that threats of 100% tariffs on Chinese imports have been temporarily withdrawn. Beijing's willingness to delay restrictions on rare earth exports also suggests progress in de-escalating trade tensions.

Overall, the combination of geopolitical risks, record Iraqi output, and prospects of an extended US-China trade truce keeps the WTI price supported, with traders awaiting this week's American Petroleum Institute (API) inventory data for further direction.