Oil Prices Rise Amid Strong Demand and Ongoing Ukraine Conflict
Global oil prices have continued to climb, driven by robust demand in the United States and ongoing uncertainty surrounding the conflict in Ukraine. On Thursday, Brent crude futures reached a two-week high, increasing by 41 cents to $67.25 per barrel, while U.S. West Texas Intermediate (WTI) crude futures rose by 45 cents to $63.16 per barrel.
The U.S. Energy Information Administration (EIA) reported a significant decline in U.S. crude inventories, which fell by 6 million barrels to 420.7 million barrels last week. This drop exceeded expectations, with a Reuters poll forecasting a 1.8 million-barrel draw. Gasoline stocks also decreased, dropping by 2.7 million barrels, as driving demand remained steady during the summer travel season.
The ongoing conflict in Ukraine continues to impact the global oil market, with efforts to secure a peace deal still underway. However, Russia has expressed skepticism about the prospects for a resolution, stating that attempts to resolve security issues without Moscow’s participation are a “road to nowhere.” As a result, Western sanctions on Russian oil supply remain in place, and the possibility of tougher sanctions and more tariffs on Russian oil buyers continues to hang over the market.
Despite these challenges, Russia remains committed to supplying crude to willing buyers. Russian diplomats in India have stated that the country expects to continue providing oil to India, despite warnings from the United States. In response, U.S. President Donald Trump has announced an additional tariff of 25% on Indian goods, effective from August 27, due to India’s purchases of Russian crude. The European Union has also sanctioned Indian private refiner Nayara Energy, which is backed by Russian oil company Rosneft.
Indian refiners had initially backed off buying Russian oil, but company officials at state-run Indian Oil and Bharat Petroleum have resumed purchases after discounts widened. According to Reuters, Indian refiners have bought Russian crude for September and October delivery, underscoring the ongoing demand for Russian oil despite international pressure.
As the situation in Ukraine continues to unfold, traders and analysts expect oil prices to remain volatile. While a peace deal could lead to a decline in prices, any continued lack of progress in negotiations could underpin the market. For now, the global oil market remains subject to the complex interplay of supply and demand, geopolitics, and economic sanctions.
