Brent crude futures rose $1.10, or 1.72%, to close at $65.16 a barrel. U.S. West Texas Intermediate crude settled at $61.04 a barrel, up 91 cents, or 1.51%.
Investors continue to assess the fallout from the U.S. sanctions on Russia, and their impact on both crude oil and refined fuel markets.
Lukoil declared force majeure at an Iraqi oilfield it operates, sources told Reuters on Monday, marking the biggest fallout yet from the sanctions imposed last month.
Restricted fuel exports due to the sanctions are propping up oil prices in the face of a crude oil glut, PVM analyst Tamas Varga said.
“Fresh U.S. sanctions on major Russian oil producers and exporters are weighing on product exports,” Varga said. As a result, heating oil and gasoline are moving in a different direction from crude.
Middle Eastern producers Saudi Arabia, Iraq and Kuwait will raise crude oil supplies to India in December as Indian refiners seek alternatives to Russian barrels, sources at four Indian refiners said on Tuesday.
The markets also saw support as the longest government shutdown in U.S. history could end this week after the Senate approved a compromise that would restore federal funding.
“The optimism around the government reopening is increasing demand expectations,” said Phil Flynn, senior analyst for Price Futures Group.
Worries about crude oversupply are curbing price gains.
Earlier this month, OPEC+ agreed to increase December output targets by 137,000 barrels per day, but also agreed to a pause in increases in the first quarter of next year.
“The oil market is also facing a considerable oversupply in the coming year, which is why prices are likely to remain under pressure. The main cause of the oversupply is the significant expansion of supply by OPEC+,” Commerzbank analysts said in a note.
OPEC+, which includes the Organization of the Petroleum Exporting Countries and allies such as Russia, has added 2 million bpd of output since April, and a willingness within the group to reverse voluntary production cuts further after the first quarter pause could add an extra 1 million bpd in the coming year, Commerzbank said.