Oil Rises 1% as Russia Sanctions Tighten and Fed Chair Search Lifts Market Sentiment

Oil prices climbed about 1%, with Brent settling at $64.89 and WTI at $60.74, as markets balanced growing global supply against tightening U.S. sanctions on Russian oil. Prices briefly spiked above $60.92 for WTI after President Trump said his administration had begun interviewing candidates for the next Federal Reserve chair, boosting risk sentiment. The U.S. Treasury reported that sanctions on Rosneft and Lukoil, introduced in October, are already squeezing Russia’s oil revenue and expected to curb export volumes. Supplies were further disrupted when exports from Russia’s Novorossiysk and CPC terminals—together handling 2.2 million bpd (2% of global supply)—were halted for two days due to Ukrainian attacks. U.S. inventory data added pressure, with crude stocks rising 4.45 million barrels, gasoline up 1.55 million barrels, and distillates increasing 577,000 barrels last week.

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Global Refining Margins Hit Multi-Year Highs as Outages and Sanctions Tighten Fuel Supply

Global refining margins surged to multi-year highs in November, with the U.S. 3-2-1 crack spread reaching $32.13 per barrel and European diesel margins climbing to $33.90, driven by sanctions on Russia, refinery outages, and maintenance disruptions. Despite crude markets softening on expectations of oversupply, refined product prices remain strong, keeping Brent supported in the low-to-mid $60s per barrel range. Disruptions from Ukrainian drone attacks on Russian refineries, outages in the U.S. and Europe, and maintenance at large plants such as Nigeria’s Dangote and Kuwait’s Al-Zour have tightened supplies. The International Energy Agency raised its estimate for European refining throughput by 290,000 bpd for November–December as high margins incentivize refineries to increase runs. Analysts warn that refining tightness may persist without new plants in Western economies, with global refining profitability already at its highest level in two years in early November.

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Ukraine Attack Slows Russia’s Novorossiysk Crude Loadings by 2–3 Days

Crude loadings at Russia’s Novorossiysk port are running 2–3 days behind schedule after a November 14 Ukrainian attack damaged key Suezmax berths at the Sheskharis oil harbour. The attack temporarily halted exports from Novorossiysk and a neighbouring Caspian Pipeline Consortium terminal, which together handle about 20% of Russia’s crude exports. Berth 1 remains idle while loading operations have shifted to berth 1A, making it difficult for the port to immediately recover lost days. Russia exported 3.22 million tons (760,000 bpd) via Novorossiysk in October, but November volumes are expected to be lower, and Kazakh oil transiting through the port may also face 1–2 day delays. Industry sources anticipate the port could clear the backlog by the end of November, barring adverse weather.

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Exxon, Chevron, Adnoc, Carlyle Circle Lukoil’s Sanctioned Global Assets

U.S. majors Exxon and Chevron, Abu Dhabi National Oil Company (Adnoc), and private equity firm Carlyle are exploring purchases of Lukoil PJSC’s international assets ahead of U.S. sanctions set for December 13. Lukoil prefers to sell its non-Russian assets as a single package, but some buyers may seek to acquire parts piecemeal, potentially in a two-step process. The Trump administration reportedly favors U.S. entities taking over Lukoil’s global assets, which could limit the pool of bidders. Exxon and Chevron are focused on the West Qurna 2 field in Iraq, while Adnoc is reportedly interested in Lukoil’s natural gas operations in Uzbekistan. A previous deal with Gunvor Group to sell Lukoil’s entire international business was blocked by the U.S., highlighting the geopolitical sensitivity of the transaction.

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China’s Yanchang Petroleum Shifts to Murban and CPC Crude Amid Sanctions Pressure

China’s Yanchang Petroleum has purchased 3 million barrels of non-Russian crude—2 million barrels of Murban from Mercuria and 1 million barrels of CPC Blend from Vitol—for January delivery. The refiner issued a tender last week seeking non-Russian crude for delivery from December to mid-February after suspending Russian oil imports due to Western sanctions. Yanchang, located in Shaanxi province, operates a refinery with a capacity of 348,000 bpd and holds an annual import quota of 3.6 million metric tons (26 million barrels). The company had regularly imported one cargo per month of Russian ESPO or Sokol crude before the recent sanctions concerns. Chinese state-owned energy firms broadly halted Russian purchases in October after sanctions targeted major Russian producers.

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California Refinery Closures Spur Race for Multi-Billion-Dollar West Coast Pipeline Projects

The planned closure of Phillips 66’s Los Angeles refinery and Valero’s Benicia refinery threatens a 280,000 bpd supply gap on the U.S. West Coast, where gasoline prices are already among the highest in the country. Energy companies, including HF Sinclair, ONEOK, and a Phillips 66–Kinder Morgan partnership, are racing to build pipelines to fill the void, though typically only one project succeeds due to limited margins. Political pressure in California creates a rare opportunity for approval of new fossil fuel infrastructure, especially for projects reusing existing pipelines. Securing 70% of capacity commitments will likely decide which pipeline moves forward, giving refiners-backed proposals an advantage. However, some industry executives question whether new pipelines will be built at all, citing the flexibility and cost advantages of sourcing waterborne fuel imports from global markets.

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Exxon to Shut Fife Ethylene Plant in 2026 Amid Rising Costs and Weak Market

Exxon Mobil announced it will close its Fife ethylene plant in Scotland in February 2026, citing high supply costs, weak market conditions, and an unfavorable UK policy environment. The company explored various options, including selling the facility near Cowdenbeath, but concluded it was no longer competitive. The shutdown will result in the loss of 200 jobs and reflects broader pressures on European chemical producers due to soaring energy costs and aging infrastructure. European chemicals are the EU’s fourth-largest export sector, behind machinery, automotive, and pharmaceuticals, increasingly dependent on imported feedstocks like ethylene and propylene. The closure coincides with falling refining capacity in the UK, as Grangemouth refinery stopped crude processing in April and Lindsey refinery is set to shut down after insolvency.