(Investing) – NEW YORK -Oil prices climbed about 1% to a three-week high on Wednesday as a surprise drop in U.S. weekly crude inventories added to a sense in the market of tightening supplies amid export issues in Iraq, Venezuela and Russia.
Brent futures rose 94 cents, or 1.4%, to $68.57 a barrel by 10:55 a.m. EDT (1455 GMT), while U.S. West Texas Intermediate crude futures (WTI) rose 97 cents, or 1.5%, to $64.38.
That put Brent on track for its highest close since September 2 and WTI on track for its highest close since September 16.
U.S. crude inventories fell 607,000 barrels last week, the Energy Information Administration (EIA) said. [EIA/S] [API/S]
That compares with the 235,000-barrel build analysts forecast in a Reuters poll, but was smaller than the 3.8 million-barrel draw market sources said the American Petroleum Institute (API) trade group cited in its figures on Tuesday.
“The report is somewhat supportive given the draws across the board here,” said John Kilduff, partner with Again Capital, referring to the crude, distillate and gasoline inventory draws in the EIA report.
Oil prices also found support from news that Ukraine’s military struck two oil pumping stations overnight in Russia’s Volgograd region. A state of emergency had been declared in the Russian city of Novorossiisk, which is Russia’s major seaport on the Black Sea and contains major oil and grain export terminals.
“The focus recently has shifted back to Eastern Europe and the possible introduction of fresh sanctions on Russia,” said PVM Oil Associates analyst Tamas Varga.
The stalled resumption of Kurdish oil exports along with Chevron ’s (N:CVX) curbed oil exports from Venezuela due to U.S. permit issues added to short-term bullishness in the market, he added.
Both crude benchmarks climbed on Tuesday as a deal to resume exports from Iraq’s Kurdistan stalled, halting pipeline shipments of what would have been 230,000 barrels per day of oil from the region to Turkey, as two key producers asked for debt repayment guarantees. Pipeline flows have been stopped since March 2023.
On Wednesday, however, the eight international oil companies operating in Iraqi Kurdistan reached agreements in principle with Iraq’s federal and Kurdish regional governments to resume oil exports, an industry umbrella group said.
Iraq was the second biggest crude producer in the Organization of the Petroleum Exporting Countries in 2024, according to U.S. energy data.
Meanwhile, U.S. President Donald Trump on Tuesday said he believed Ukraine could retake all the territory captured by Russia, marking a sudden rhetorical shift in Ukraine’s favour. The Trump administration earlier this month urged European Union countries to phase out Russian oil and gas more quickly.
Russia is seeing shortages of certain fuel grades as Ukrainian drone attacks reduce refinery runs, according to traders and retailers, after Ukraine stepped up drone attacks on energy infrastructure to reduce Moscow’s export revenues.
Russia was the second-biggest producer of crude in 2024 behind the U.S. and is a member of OPEC+, which includes OPEC and allies.
Iran Oil Minister Mohsen Paknejad said “new burdensome restrictions” on Iran’s oil sales would not be added and sales to China would continue, as Tehran and European powers struggle to reach a deal to prevent the return of U.N. sanctions this week.
Overall, the global oil market is bracing for elevated supply and slowing demand. In its latest monthly report, the International Energy Agency said world oil supply would rise more rapidly this year and a surplus could expand in 2026.
