WTI Oil Up 1.7% as Markets Grapple with Geopolitical Shocks and Structural Supply Glut

Most Read: Gold (XAU/USD) Price Forecast: Bullish Breakout Gathers Pace as Fed Pivot Expectations Firm, $4250/oz Incoming?

Oil prices went up by 1.7% on Tuesday as markets grappled with the latest US sanctions on Russian Oil against optimism that the US Government shutdown could end soon.

The challenge for bulls is that concerns continue to linger around oversupply in Q4 of 2025 and beyond.

Concerns around a supply glut is down to major oil producers, including the United States, the members of OPEC, and Russia, are all pumping very large amounts. The resilience of US shale output, combined with the difficulty in coordinating deep, sustained cuts across the OPEC+ alliance, has maintained production at levels that consistently exceed utilization.

The physical consequences of this glut are evident in global inventory dynamics. There has been a recent spike in crude oil stored onboard ships, often termed "floating storage," particularly in Asian waters.

Furthermore, substantial volumes of unsold cargoes are accumulating in the Middle East

This accumulation on both land and at sea points directly to softening immediate demand and signals a profound weakness in the physical spot market. When sellers must compete to offload stockpiles, it raises fears of prolonged price weakness.

This has been playing on the mind of market participants for the last few months which has no doubt kept Oil prices subdued.

Adding further downward pressure to the market are significant macroeconomic headwinds.

Global oil demand growth remains sluggish, contributing to the existing surplus. Furthermore, the sustained strength of the US dollar of late, influenced by delays in anticipated Federal Reserve rate cuts, makes dollar-denominated crude oil more expensive for international buyers. This currency effect acts as a marginal dampener on demand, exacerbating the supply/demand mismatch.

The fact that inventory accumulation is so widespread implies that the market structure is either in contango or rapidly moving toward it, where future prices significantly exceed spot prices.

This structure compensates traders for the cost of storage, reinforcing the bearish view that immediate supply far exceeds current needs, thereby favoring strategic stockpiling over immediate consumption.

A significant downside risk stems from the potential fragility of OPEC+ compliance. Despite the current surplus, there remains the risk of further increases in OPEC+ production targets.

Should compliance falter, or should high-volume producers abandon output restraint, the glut would worsen instantly, potentially accelerating the technical move toward the $55.00 level.

Another factor affecting Oil prices was the trouble faced by the Russian company Lukoil in Iraq due to US sanctions. Because of the sanctions, Lukoil could not handle international payments, forcing it to stop certain activities at the West Qurna-2 oil field. This field is very important to Iraq, producing about 480,000 barrels of oil a day, or about 9% of their total output.

Right now, Iraq's oil authorities have stopped all payments both cash and oil shipments owed to Lukoil because they must follow US and UK sanctions. This payment freeze is causing immediate operational problems.

The biggest long-term risk is that if the payment issues aren't fixed, Lukoil has threatened to completely stop production and leave the massive West Qurna-2 field within six months. Losing such a huge producer would be very hard for Iraq to manage and represents a major, long-term risk that could seriously reduce global oil supply in the future.

Furthermore, these sanctions are having an indirect effect on the current oil oversupply. Sanctions are forcing big Asian buyers like China and India to purchase less Russian oil and instead buy more from the Middle East. This unsold Russian oil is then being stored on ships or in reserves, adding to the existing global oil surplus and pushing prices down.

From a technical analysis standpoint, WTI crude oil has been stuck in a consolidation phase in the critical $59.50 to $62.00 zone, an area that has exhibited significant "market memory" from previous trading periods.

The long-term descending trendline is being tested at present at the same time the RSI period-14 has crossed above the 50 neutral level.

Is this a precursor to a trendline break?

Even if it is, recent price action suggests that bullish momentum may fade quickly. This is also backed up by the overarching macroeconomic factors discussed above.

WTI Oil Daily Chart, November 11, 2025

Looking at OANDA client sentiment data and market participants are long on WTI with 86% of traders net-long. I prefer to take a contrarian view toward crowd sentiment and thus the fact that so many traders are long means WTI prices could decline in the near-term.

Follow Zain on Twitter/X for Additional Market News and Insights @zvawda