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Oil prices edged higher on Thursday as intensifying military exchanges between Russia and Ukraine overshadowed concerns over rising U.S. crude inventories. The geopolitical tensions bolstered market uncertainty, keeping prices elevated despite bearish supply data from the United States.
Brent crude futures rose 1.3% to $73.77 per barrel by 10:17 GMT, while U.S. West Texas Intermediate (WTI) crude gained 1.4% to $69.74. Both benchmarks had earlier climbed by over $1 during the session.
Geopolitical Tensions Drive Market Volatility
The escalation in the Russia-Ukraine conflict added fresh risks to energy markets. Ukraine launched British and U.S. missiles at Russian territories this week, prompting Moscow to respond with an intercontinental ballistic missile targeting Ukraine. This marked a significant escalation, with the war reaching its 1,000th day.
Russia warned that Kyiv’s use of Western-supplied weaponry to strike deep within its borders could provoke severe consequences. Ukraine, however, insists such measures are vital for defending itself and neutralizing Russian bases supporting the invasion.
OPEC+ Deliberates Future Output Plans
As geopolitical factors dominate the market, OPEC+ is considering delaying planned output increases during its December 1 meeting. The group, which produces nearly half of the world’s oil, had initially aimed to reverse production cuts gradually between late 2024 and 2025. However, subdued global oil demand has raised the possibility of postponing these adjustments.
The International Energy Agency (IEA) projects that even if OPEC+ maintains production cuts, supply could still outpace demand by 2025, adding complexity to the cartel’s strategy.
Bearish Inventory Data Weighs on Gains
Counterbalancing geopolitical concerns, a larger-than-expected build in U.S. crude inventories tempered market gains. The Energy Information Administration reported a 545,000-barrel increase in crude stockpiles to 430.3 million barrels for the week ending November 15, surpassing analysts’ predictions.
Gasoline inventories also rose more than anticipated, while distillate stockpiles saw a larger-than-expected draw, reflecting mixed signals on U.S. demand trends.
Market Outlook
Oil prices remain caught between conflicting forces—heightened geopolitical risks supporting bullish sentiment and supply concerns exerting downward pressure. Traders will closely watch developments from OPEC+ and further updates on the Russia-Ukraine conflict as key drivers for price direction in the coming weeks.
