Oil Prices Surge as Powell’s Cautious Tone and Global Supply Fears Spark Rally

Crude oil prices surged during the North American trading session on Tuesday, September 23, 2025, driven by Federal Reserve Chairman Jerome Powell’s cautious economic outlook and mounting concerns over global supply disruptions. West Texas Intermediate (WTI) crude rose 0.66% to close at $63.83 per barrel, while Brent crude climbed 1.59% to $67.63, and Murban crude jumped 2.04% to $70.16. The rally was fueled by Russian export shifts, stalled Iraqi oil flows, and a slightly weaker US Dollar, despite lingering worries about rising production and softer global demand. Traders remained focused on upcoming inventory data and geopolitical developments, which kept the market on edge.

The session began with WTI trading near $63.50, gaining momentum as supply concerns took center stage. Russia’s crude exports hit a four-month high of 3.62 million barrels per day in the week ending September 21, spurred by refinery disruptions from Ukrainian drone strikes that slashed output to its lowest since April 2022. This pushed more Russian crude to markets like India, where imports could soon hit 2 million barrels per day. Meanwhile, Iraq’s efforts to restart 230,000 barrels per day of Kurdish exports through Turkey, halted since March 2023, faced setbacks, tightening global supply. A reported 3.6 million barrel drop in US crude inventories further supported prices, lifting WTI to $63.69 and Brent to $68.09 by the close, as markets prioritized immediate supply risks over longer-term oversupply fears.

Jerome Powell’s comments added fuel to the rally. He highlighted the Federal Reserve’s challenge in balancing inflation control with a weakening labor market, warning that rapid rate cuts could reignite price pressures. This cautious stance briefly lifted the US Dollar Index by 0.1% to 97.21 before it eased, making oil more attractive to global buyers. However, weaker-than-expected US economic data, including disappointing manufacturing and services activity, raised concerns about demand. These mixed signals underscored global economic challenges, with rising electric vehicle use and slower industrial growth clouding the demand outlook.

Geopolitical tensions further boosted oil’s risk premium. NATO’s strong response to Russian airspace violations and ongoing Ukrainian attacks on Russian refineries heightened fears of supply interruptions. Former President Donald Trump’s reported call for Europe to stop buying Russian energy intensified market jitters, contributing to Brent’s stronger gains. The Brent-WTI price gap narrowed to $3.80, reflecting tighter global supply conditions. Despite these bullish drivers, concerns persisted due to OPEC+ increasing Russia’s production quota to 9.449 million barrels per day and growing non-OPEC output. China’s continued stockbuilding, with another cargo from Russia’s Arctic LNG 2 project arriving at Beihai, signaled resilient Asian demand despite sanctions.

The oil market remains poised for volatility. Traders are closely watching Wednesday’s US inventory report, expected to show a 1.2 million barrel draw, and potential new sanctions on Russian oil. Canada’s efforts to diversify trade, including a recent agreement to boost ties with Mexico ahead of the 2026 USMCA review, could also strengthen the Canadian Dollar, impacting oil-linked currency pairs like USD/CAD. For now, Powell’s cautious rhetoric and global supply uncertainties have ignited a bullish spark, but the balance between tight supplies and weakening demand will dictate whether this rally can hold.