Global oil prices sustained their strongest advance in a week, with investors monitoring the risk of supply disruptions from OPEC+ after the U.S. President Donald Trump escalated his criticism of Russia. Brent crude surged above USD 68 a barrel after climbing 1.6% on Tuesday, while West Texas Intermediate traded slightly below USD 64.
During an address at the United Nations General Assembly in New York, President Trump suggested that NATO countries should consider shooting down Russian planes violating allied airspace, and voiced increased optimism for Ukraine’s prospects in the ongoing conflict.
He also reiterated his call for European nations to cut energy imports from Russia, emphasizing that China and India are the primary funders of the ongoing war by continuing to purchase Russian oil. However, the President also pointed out that some NATO countries have not cut off much Russian energy and Russian energy products.
The market is also reacting to potential supply headwinds from Russia after the country considered curbing diesel exports by some companies. This follows recent attacks by Ukrainian drones targeting Russia’s energy infrastructure, heightening concerns over supply stability. Gasoil, which includes diesel, saw prices jump 2.4% higher in Europe on Tuesday, marking its largest increase in three weeks.
UBS Group AG analyst, Giovanni Staunovo stated that “Oil prices remain supported as inventories in the OECD stay low, and it looks like the U.S. will have another large crude draw.” However, he warns that a rise in OPEC+ crude exports in September poses a challenge for bulls.
Despite recent gains, oil prices are largely unchanged for the month, as ongoing geopolitical risks are offset by bearish fundamentals. On the supply side, Iraq is close to a deal to resume crude shipments from its Kurdistan region after a two-year halt, which could restore approximately 230,000 barrels per day to the global market and intensify a potential oversupply.
In the U.S., an industry report indicated a 3.8-million-barrel drop in crude inventories last week, though distillate stocks increased. Government data on oil stockpiles is expected later on Wednesday.
