WASHINGTON (dpa-AFX) - Crude oil soared on Wednesday due to Iraq's issues with oil exports to Turkey along with the increasing likelihood of Russian oil exports being hit with heavy US sanctions as evidenced by comments by US President Donald Trump on Ukraine.
WTI Crude Oil for November delivery was last seen trading up by $1.61 (or 2.54%) at $65.02 per barrel.
On September 22, Turkey and Iraq reportedly agreed to restart oil exports from Kurdistan via a pipeline to the Turkish coast. This arrangement was supposed to flood markets with 230,000 barrels per day of oil. Oversupply concerns began to surface, pulling down prices.
Yesterday, however, debt repayment guarantee issues stalled Iraq's exports, pacifying traders and reversing earlier losses.
Today, new reports suggest that a breakthrough deal to restart oil exports through Turkey's Ceyhan port is just around the corner, though the exact timing remains uncertain.
US President Donald Trump yesterday - in an apparent reversal - stated that Ukraine has the capability to take back all the territories that Russia has occupied. However, Russia dismissed Trump's comments and stated that war was the only option.
Months before, Trump recommended Ukraine cede territories to strike a peace deal with Russia.
Meanwhile, Ukraine intensified its attacks on Russia by pounding several Russian refining operations.
Traders feel that aggravation of the conflict could attract intervention by the US, including heavy sanctions on Russian oil exports.
Earlier today, Ukrainian drones attacked one of Russia's largest petrochemical complexes - Salavat - in the Bashkortostan region. Located about 1,500 kilometers from the front lines in Ukraine, Salavat produces 150 types of products including automotive gasoline, diesel fuel, fuel oil, bitumen, and polyethylene.
Attacks also targeted Russian oil distribution facilities in the Bryansk and Samara regions.
The Israeli air strikes on Doha on September 9, targeting Hamas leaders forced Qatar's Emir Sheikh Tamim bin Hamad Al Thani to raise the issue in his address at UN General Assembly, where he criticized Israel as a 'rogue state.'
However, Israel showed no signs of regret but stuck to its stand of eliminating Hamas leaders 'wherever they are'.'
As of now, the situations in Europe and the Middle East remain tense though externally calm, with traders concerned about serious escalations.
On the inventory front, data released by the US Energy Information Administration today revealed that for the week ending September 19, crude oil inventories fell by 0.6 million barrels, gasoline stocks decreased by 1.1 million barrels, and distillate stocks (including home heating oil and diesel) fell by 1.7 million barrels.
At 414.8 million barrels, US crude oil inventories are about 4% below the five-year average for this time of year, the EIA said.
Lower distillate inventories increase the risk of higher prices particularly during periods of autumn harvest and winter heating season.
Data released by the American Petroleum Institute on Tuesday revealed that for the week ending September 19, US crude oil inventories fell by 3.821 million barrels following a 3.42-million-barrel draw in the prior week.
On the monetary front, investors continued betting on two more rate cuts by the US Fed this year following last week's lowering by 25 basis points.
Yesterday, US Fed Chair Jerome Powell, in his first address following last week's meeting, underlined that aggressive rate cuts could pose inflation risks to the economy.
The global economic scenario remains cloudy as the validity of 'reciprocal tariffs' imposed by Trump stands to be tested by the US Supreme Court, which will read out its judgment possibly by June 2026.
Until then, though the tariffs remain in place, countries are unable to decide on the future trade path.
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