Oil prices have risen due to the impact of the latest U.S. sanctions on Russian oil, even as oversupply concerns still persists.

Brent crude futures were up 67 cents, or 1.1 per cent, to $64.73 a barrel, while the U.S. West Texas Intermediate crude was at $60.78 a barrel, up 65 cents, or 1.1 per cent, on Tuesday.

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. As a result, heating oil/gasoil and RBOB gasoline are moving in a different direction from crude,” he said.

European diesel futures’ premium to Brent crude was at a 21-month high of more than $31.50 per barrel on Tuesday, while European gasoline profit margins were at their highest in 18 months at almost $21 per barrel on Monday. [PRO/E]

Worries about crude oversupply are curbing how much oil prices can rise.

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.

Additionally, the volume of oil stored on board ships in Asian waters has doubled in recent weeks after tightening Western sanctions hit exports to China and India, analysts said.

Otherwise, wider markets 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.