Oil prices to trade in $56-$63 range in coming weeks, says analyst

Ineffective western sanctions keep oil under pressure 

The initial rally in oil prices last week, sparked by the US Treasury's sanctions on Rosneft and Lukoil on October 22, 2025, has dissipated as markets recognise Russia's proven circumvention tactics since 2022. Through shadow fleets, third-country intermediaries, and non-dollar trades, Russia is likely to maintain 80–90 per cent of its export volumes, mitigating impacts on Rosneft (3.5 million bpd, 40 per cent of Russia's production) and Lukoil (0.9 million bpd, 10 per cent share).  While sanctions have reduced revenues by over 20 per cent to $297 billion in 2024 and exports by 20 per cent since 2022, they fail to cripple the sector due to Europe's dependency, Russia's adaptability, and enforcement gaps, keeping oil under pressure. 

Latest sanction impact

 

Rosneft and Lukoil are blocked from US financial systems, complicating dollar trades and shipping, potentially disrupting 1–1.5 million bpd short-term. This could shift the market from a 0.5 million bpd surplus to a deficit by 2026, with a 1 million bpd swing roughly pushing prices $6–$7/bbl higher.

India and China avoid russian oil

India and China, absorbing 3.7 million bpd (25 per cent of Russia's exports), face challenges, with Indian refiners pausing shipments and China suspending new seaborne purchases, redirecting to Middle East/US sources. India's state refiners cut Russian buys by 45 per cent in Q3, maintaining volumes at 1.7 mb/d (34 per cent share).

US & OPEC+ keeping market in surplus

US output hit a record 13.642 million bpd in the week ending October 24, 2025, up 0.1 per cent w-o-w and 5.4 per cent y-o-y, with the Permian Basin at 6.6 million bpd (48 per cent of US total). EIA forecasts 13.53 million bpd for 2025 (+2 per cent y-o-y) and 13.51 million bpd in 2026, leading non-OPEC growth of 1.6 million bpd in 2025 and 1.2 million bpd in 2026, outpacing demand at 740,000 bpd. OPEC+ is expected to add 137,000 bpd from December, bringing total restoration to 2.85 million bpd from April onward. a negative development for long term price outlook.

 

Macro development

The US-China trade agreement is a tactical pause, extending the 90-day truce beyond November 10 without resolving core issues like intellectual property, technology transfers, and structural reforms. While the US suspended broader software export curbs on laptops and jet engines, reducing tariffs to 47 per cent on Chinese goods and 30 per cent on US imports, this limited scope focusing on temporary measures like fentanyl cooperation and supply chain adjustments underscores ongoing economic competition, with both sides retaining leverage for future talks. 

 

Outlook

Global crude oil supplies are poised for a deepening glut, with prices likely to decline toward $50 per barrel by mid-2026 amid sluggish demand growth and robust production. Oil prices are projected to trade in a broader $56–$63 range in the coming weeks, with markets closely watching global manufacturing activities in the coming week.

 

(Disclaimer: This article is by Mohammed Imran, research analyst, Mirae Asset Sharekhan. Views expressed are his own.)