Oil prices saw a notable rise on Thursday as missile exchanges between Russia and Ukraine dominated market sentiment, despite an unexpected increase in US crude inventories. Brent crude futures increased by 96 cents, or 1.3%, to $73.77 per barrel, while US West Texas Intermediate crude futures rose by 99 cents, or 1.4%, to $69.74 per barrel.
The uptick in oil prices follows escalating tensions in the ongoing conflict between Russia and Ukraine. Ukraine launched British cruise missiles into Russian territory on Wednesday, marking a significant use of Western-supplied weapons. In response, Russia fired an intercontinental ballistic missile at Ukraine, a first in the war. The exchange has heightened concerns over potential damage to Russian energy infrastructure, which could disrupt global oil markets.
As the war, now in its 1,000th day, continues, market analysts remain cautious. ING analysts pointed out that oil prices could face further volatility if Ukraine targets Russian energy facilities or if Moscow escalates its response.
Meanwhile, discussions within OPEC+ suggest the group may delay planned increases in oil production when it meets on December 1. OPEC+ which includes major oil producers like Russia had initially aimed to reverse production cuts gradually over the next few years. However, weak global demand for oil and the possibility of oversupply in 2025 have prompted reconsideration of these plans.
In contrast, US crude inventories rose by 545,000 barrels in the week ending November 15, reaching 430.3 million barrels, which was higher than analysts’ forecasts. Gasoline inventories also rose, while distillate stockpiles saw a larger-than-expected draw. Despite this, the market remains focused on the geopolitical risks posed by the ongoing conflict between Russia and Ukraine.