WASHINGTON (dpa-AFX) - Crude oil advanced on Tuesday, extending gains for the second day amid increasing expectations of western sanctions against Russia even as the feared OPEC+ hike decision turns out to be lower than expected. Fresh concerns following today's Israeli attack on Qatar added support to oil prices.
WTI Crude Oil for October delivery was last seen trading up by $0.29 (or 0.47%) at $62.55 per barrel.
On the geopolitical front, the Russia-Ukraine war continues intensely as Russia has ignored sanction threats from the US and the West, and the country also shrugged off the diplomatic efforts by US President Donald Trump to bring Russia and Ukraine to negotiating table.
In the latest aerial military strike by Russia on Ukraine, around 21 civilians queueing for pensions in the village of Yarova in Donetsk were killed in a glide bomb attack.
Other than issuing sanction threats, Trump has so far not engaged in any form of offensives against Russia directly other than punishing a major buyer of Russian oil, India, with 'penalty tariffs' of 25%. Another major buyer China has been spared.
However, potential sanctions against Russian oil exports by the US and the west have boosted oil prices.
On Sunday, the OPEC+ member-nations agreed to increase their oil production by 137,000 barrels per day beginning October. The cartel has already successfully implemented output hikes of 411,000 in June and July, and are implementing their planned increase of about 555,000 bpd for August-September.
Though speculation was rife that Sunday's output decision would result in a huge figure which triggered oversupply concerns, the actual announced number was lower in comparison, keeping the markets steady.
In a sudden significant development in the Middle East, the Israeli military struck the Hamas delegation in Doha, capital of Qatar, in an Israeli operation, called 'Summit of Fire,' triggering fresh tensions and pushing up oil prices.
Reportedly, an Israeli official has stated that the US was informed ahead of the attack.
According to S&P Global Commodity Insights, China is reportedly pacing up its crude oil stockpiling with an inventory rate of 530,000 bpd so far this year. This has also helped to soak up excess production in the markets.
Of note, China's total onshore crude oil inventories stands at around 1.4 billion barrels. Being the world's top crude oil importer, China keeps the inventory numbers close to its chest without reporting officially. Analysts look at overall supply and refinery processing rates to calculate the quantum of oil reserves.
In the upcoming September 16-17 meeting, the US Federal Reserve is expected to cut borrowing rates. The US Dollar price could vary depending on the size of the cut.
According to analysts, oil being a dollar-denominated commodity, its price would be altered by the lowering of rates.
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