Oil Continues to Rise as Russian Stockpiles Fall
Oil continued its strong start to the year as risks to global supply mounted, and as commercial crude inventories in the U.S. posted their longest decline since 2021.
West Texas Intermediate rose above $80 a barrel after rising more than 3% on Wednesday, hitting its highest level since July. Brent closed near $82. Last week’s U.S. sanctions on Russia’s energy industry have rattled markets, with the International Energy Agency warning that they could “significantly disrupt” the country’s supply and distribution chains.
Longtime buyers of Russian crude have looked elsewhere, while the amount of oil stranded offshore China has ballooned as traders, refiners and shippers try and avoid getting caught up in the restrictions. India has rushed to pay for existing Russian oil purchases. Crude has risen about 12% since the start of the year, helped by a Northern Hemisphere winter that has boosted demand, a steady decline in U.S. inventories and a range of risks to shipping. In addition to the Russian curbs, traders worry that the incoming Trump administration could tighten sanctions on Iran and impose trade levies that could hurt oil exports and risk retaliation.
In its monthly market summary on Wednesday, the IEA said the 160 tankers sanctioned by the U.S. last week were due to ship more than 1.6 million barrels of Russian oil per day in 2024, about 22% of the country’s seaborne exports. It also noted that previous rounds of restrictions had been “highly effective, reducing designated tanker activity by up to 90%.”
In the U.S., oil inventories fell for an eighth week to their lowest since April 2022, official data released on Wednesday showed. They are at a seasonal low in six years.
Source: Bloomberg
