Oil Prices Edge Higher After Sharp Rally on Geopolitical Risks
Oil prices moved slightly higher in Asian trading on Thursday, extending gains after a strong rally of more than 4% in the previous session. The advance was supported by persistent U.S.-Iran tensions, stalled Russia-Ukraine peace talks, and an unexpected draw in U.S. crude inventories.
By 22:40 ET (03:40 GMT), Brent crude futures for April delivery rose 0.3% to $70.59 per barrel, while West Texas Intermediate (WTI) crude gained 0.4% to $65.45 per barrel. Both benchmarks had surged over $3 in the prior session.
Trading volumes across Asia remained relatively thin due to Lunar New Year holidays in several markets.
Middle East Tensions Fuel Supply Concerns
Energy markets remained sensitive to rising geopolitical risks in the Middle East. Growing friction between Washington and Tehran has heightened fears of potential disruptions to oil shipments through the Strait of Hormuz, a key global energy chokepoint.
Reports of increased military and naval activity in the Gulf have reinforced concerns about supply vulnerabilities.
Meanwhile, hopes for relief in Russian energy exports diminished after Russia-Ukraine peace discussions failed to produce meaningful progress, keeping sanctions risks in focus.
US Crude Inventories Unexpectedly Decline
Oil prices also found support from fresh supply data. The American Petroleum Institute (API) reported that U.S. crude stockpiles fell by approximately 609,000 barrels in the week ending February 13.
The decline contrasted sharply with expectations in a Reuters survey, which had forecast a build of 2.1 million barrels. It also reversed the prior week’s substantial increase of more than 13 million barrels.
A drop in inventories typically signals stronger refinery demand or tighter supply conditions, both of which tend to support higher oil prices. Official data from the Energy Information Administration (EIA) is scheduled for release later on Thursday.
Rate Uncertainty and Demand Outlook Remain Key Risks
Despite the recent rally, investors remain cautious about the broader global demand outlook. Concerns over further monetary tightening in major economies could weigh on fuel consumption.
Minutes from the Federal Reserve’s latest meeting revealed divisions among policymakers over the need for additional interest rate hikes. While officials generally agreed that inflation risks remain elevated, views differed on how restrictive monetary policy should become and how long rates should stay high.
Markets are now focused on the upcoming U.S. Personal Consumption Expenditures (PCE) price index data, due Friday. As the Fed’s preferred inflation measure, the PCE report is expected to provide clearer guidance on the future path of interest rates.
