WASHINGTON (dpa-AFX) - Crude oil surged on Wednesday as investors eyed the developments in Ukraine, with Russia stepping up its military strikes, along with data on US crude inventories.
WTI Crude Oil for October delivery was last seen trading up by $0.83 (or 1.33%) at $64.08 per barrel.
Despite pressure from the US to stop the three-plus-year war with Ukraine, Russia has stepped up its military attacks.
The Russian army has reportedly crossed into Ukraine's Dnipropetrovsk region, intensifying the aggression, al though it is facing severe retaliation from Ukraine.
The peace initiatives taken by US President Donald Trump where he met the leaders of Russia and Ukraine separately has stalled with no adequate cooperation from the Russian side. Notably, last week, Trump had announced that he will prepare grounds for the two leaders to meet face-to-face for negotiations to end the conflict.
Recently, Russian refineries were hit by Ukrainian drone attacks, forcing Russia to export the crude they cannot process.
Trump has threatened an 'economic war' that would be 'very bad' for Russia if the major power prolongs the ongoing conflict.
Any escalation could lead to heavy sanctions on Russian oil exports by the US and this raises supply side concerns.
Notably, the US imposed 25% additional 'penalty tariff' on India to dissuade it from purchasing Russian oil. With India importing around 1.7 million barrels of Russian crude daily, traders warn of a global shortage and eventual price hike if India diverts the purchase from Russia.
Data released by the Energy Information Administration today revealed that for the week ending August 22, crude oil inventories in the US fell by 2.392 million barrels to 418.3 million barrels, gasoline inventories fell by 1.236 million barrels to 222.3 million barrels, distillate inventories decreased to 17,86,000 barrels, and heating oil inventories increased by 1,02,000 barrels.
Crude inventories at the Cushing delivery hub in Oklahoma fell by 838,000 barrels.
A day before, the American Petroleum Institute released data which said that crude oil inventories contracted by 974,000 barrels.
The drop in US crude supported oil prices on the upside.
On August 3, the OPEC+ member nations agreed to raise oil production by 547,000 barrels per day for September.
Traders feel that a decision on a further production increase by the cartel at the crucial September 7 meeting could weigh upon oil prices in the coming days.
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