WTI rebounds on Russian depot strike, US sanctions despite oversupply fears

• WTI rises toward $60, driven by the destruction of a Russian Oil depot in Novorossiysk.
• Supply risks intensify ahead of new US sanctions targeting Russia.
• Forecasts of a significantly oversupplied market in 2025 and 2026 continue to limit Oil's rebound.

West Texas Intermediate (WTI) US Oil trades around $59.50 on Friday at the time of writing, up 1.60% on the day, after hitting a daily high at $60.47. The Crude Oil recovers after a Ukrainian drone strike damaged an Oil depot at Russia's Black Sea port of Novorossiysk, one of the country's key export hubs. According to regional authorities cited by Reuters, debris from the strike hit a trans-shipment facility and several coast-side structures, immediately stoking fears of supply disruptions.

Oil prices are also gaining support from risks surrounding upcoming United States (US) sanctions targeting Russian Oil flows, which come into force on November 21. Lukoil, one of Russia's largest private producers, has reportedly begun reducing staff across its global trading units, a sign that market participants are preparing for reduced operational flexibility. 

Analysts warn that a significant portion of Russia's seaborne Crude exports could become stranded, as rerouting is hampered by India and China recently halting their Russian crude purchases.

However, this geopolitical boost collides with much heavier fundamental pressures. The International Energy Agency (IEA) expects a surplus of over 2.4 million barrels per day in 2025 and more than 4 million in 2026, even as global demand continues to grow. These projections align with those from the Organization of the Petroleum Exporting Countries and its allies (OPEC+), which has been increasing output since April and anticipates another modest market surplus next year.

In the United States, the Energy Information Administration (EIA) reported a much larger-than-expected increase in Crude Oil inventories this week, reinforcing concerns about an already oversupplied market. These rising stockpiles come as US Oil production approaches record levels, adding structural downward pressure on prices.

Against this backdrop, WTI manages to rebound primarily on geopolitical risk, but the move remains constrained by fundamentals that still point to persistent weakness. Traders will now watch for developments on US sanctions, Russian supply flows, and upcoming monthly reports from the IEA and OPEC+, which will be key to assessing whether the recent recovery in Oil prices can last.