Oil Prices Rise Amid Supply Concerns and Declining U.S. Stockpiles

Oil prices have continued to rise, driven by increasing worries about global supply disruptions, particularly concerning Russia. As of Wednesday, Brent crude surpassed $82 per barrel, marking a 2.6% increase and reaching its highest point since July.

Declining U.S. Oil Inventories

U.S. commercial crude inventories have shed stock for eight consecutive weeks, hitting their lowest levels since April 2022, according to recent official reports. This decline in inventories is the longest streak since 2021 and signals a tightening physical market. The prompt spread of West Texas Intermediate (WTI), which reflects the difference between its nearest contracts, has widened to $1.34 per barrel, indicating a bullish trend.

Impact of Sanctions on Russia

Last week’s U.S. sanctions targeting Russia's energy sector have created jitters in the market, with the International Energy Agency (IEA) cautioning that these measures could lead to significant disruptions in Russia’s supply chains. In response, long-standing buyers of Russian crude are diversifying their sources, and there has been an increase in oil stranded off the Chinese coast as market players aim to avoid sanctions. Meanwhile, Indian state refiners are hastily securing payments for ongoing Russian oil purchases.

Factors Influencing Oil Market

Since the start of 2025, Brent crude has rallied by 10%, driven by cold weather boosting demand, alongside falling U.S. inventories and various risks to shipment flows. Concerns are also growing about potential new sanctions from the incoming Trump administration against Iran that could further disrupt oil supply. The IEA’s recent snapshot indicated that the 160 tankers sanctioned last week accounted for over 1.6 million barrels a day of Russian oil exports this year, roughly 22% of its maritime exports. The effectiveness of previous sanctions has been notable, successfully cutting designated tanker activity by up to 90%.

Geopolitical Events and Their Effects

The surge in oil prices occurred even as Israel and Hamas reached a ceasefire agreement, temporarily halting fighting in the Gaza Strip after a protracted conflict lasting 15 months. The ceasefire is expected to last for six weeks, as confirmed by U.S. and Qatari officials. These geopolitical developments, alongside market trends, continue to shape the dynamics of global oil prices.

oil, prices, Russia