Oil prices hold near recent gains as traders eye end of US government shutdown

Oil prices held steady on Wednesday as investors weighed the likelihood of an end to the prolonged US government shutdown, which many believe could revive energy demand in the world’s largest crude consumer.

Brent crude inched down by 8 cents to trade at $65.08 per barrel, while US West Texas Intermediate slipped by 7 cents to $60.97 in early Asian trade. The slight dip came after both benchmarks surged more than one percent in the previous session, supported by optimism over Washington’s political progress.

Shutdown deal raises hopes for fuel demand

The US House of Representatives, controlled by the Republicans, is expected to vote later on a Senate-approved bill that would temporarily reopen federal agencies until January 30. Market watchers say a resolution could lift consumer confidence and stimulate travel and spending, helping fuel demand rebound after weeks of uncertainty.

Tony Sycamore, an analyst at IG Markets, noted that renewed government activity could “breathe life back into the economy,” adding that a reopening would likely translate into higher energy consumption across key sectors.

The partial shutdown, now one of the longest in US history, has already caused disruptions across the economy, including thousands of delayed flights. Analysts say a return to normal operations could quickly boost jet fuel usage, particularly with the holiday season approaching.

Russian sanctions tighten supply outlook

Meanwhile, supply concerns continued to underpin prices. The US recently imposed sanctions on two major Russian oil companies, Lukoil and Rosneft, intensifying pressure on global crude flows. The measures are the first direct actions against Russia’s energy sector under President Donald Trump’s second term.

The restrictions have already begun to ripple through Asia’s refining market. According to Reuters, China’s Yanchang Petroleum is now seeking non-Russian crude in fresh tenders, while a subsidiary of Sinopec, Luoyang Petrochemical, has temporarily halted operations for maintenance linked to the sanctions’ impact.

Traders say that with the potential for reduced Russian exports and renewed American demand, the oil market could soon find itself in a tighter balance, keeping prices supported in the near term.