Oil prices climbed about 3% to a seven-week high on Wednesday as a surprise drop in U.S. weekly crude inventories added to a sense in the market of tightening supplies amid export issues in Iraq, Venezuela and Russia.
Reuters reports that Brent futures rose by $1.68, or 2.5%, to settle at $69.31 a barrel, while U.S. West Texas Intermediate (WTI) crude futures rose $1.58, or 2.5%, to settle at $64.99.
U.S. crude inventories fell by a surprise 607,000 barrels last week, the Energy Information Administration said. ,
That compares with the 235,000-barrel build analysts forecast in a Reuters poll, but was smaller than the 3.8 million-barrel draw market sources said the American Petroleum Institute trade group cited in its figures on Tuesday.
“The report is somewhat supportive given the draws across the board here,” said John Kilduff, partner with Again Capital, referring to the crude, distillate and gasoline inventory draws in the EIA report.
Oil prices also found support from news that Ukraine’s military struck two oil pumping stations overnight in Russia’s Volgograd region. A state of emergency was declared in the Russian city of Novorossiisk, which is Russia’s major seaport on the Black Sea and contains major oil and grain export terminals.
“The focus recently has shifted back to Eastern Europe and the possible introduction of fresh sanctions on Russia,” said PVM Oil Associates analyst Tamas Varga.
Russia is seeing shortages of certain fuel grades as Ukrainian drone attacks reduce refinery runs, according to traders and retailers, after Ukraine stepped up drone attacks on energy infrastructure to reduce Moscow’s export revenues.
Russia’s finance ministry proposed raising the rate of value-added tax to 22% from 20% in 2026 to fund military spending and help curb a swelling budget deficit, in what would be the fifth year of the war in Ukraine.
Russia was the second-biggest producer of crude in 2024 behind the U.S. and is a member of OPEC+, which includes OPEC and allies.
U.S. President Donald Trump said he believed Ukraine could retake all the territory captured by Russia, marking a sudden rhetorical shift in Ukraine’s favour. The Trump administration earlier this month urged European Union countries to phase out Russian oil and gas more quickly.
