Oil prices nudged higher after a volatile 24 hours in geopolitics revived concerns about supply routes, even as near-term fundamentals flashed softer. Traders marked up risk after reports of Israeli strikes on Houthi targets in Yemen, a reminder that Red Sea shipping lanes remain vulnerable whenever the conflict widens beyond Gaza.
The latest round of strikes was reported Wednesday local time, adding to a year of sporadic attacks and interceptions around the Bab el-Mandeb chokepoint.
In Washington and Brussels, officials weighed sharper tools to curb the Kremlin’s oil revenue. Discussions this week included U.S. pressure on Europe to pursue steeper duties on buyers of Russian barrels and faster steps to wind down remaining Russian fossil fuel purchases.
While Europe is already enforcing a maritime crude embargo and the G7 price cap, a faster phase-out and tighter enforcement are on the table, according to officials and public statements.
EU leaders signaled they are studying options, though broad tariff moves on major Asian buyers remain politically fraught.
Those reports helped Brent and West Texas Intermediate climb from recent lows. Brent settled near the high-$60s and WTI in the mid-$60s on Wednesday, a gain of roughly 1.7 percent apiece, before paring some strength in after-hours trading.
Traders described the move as a modest geopolitical premium rather than a decisive shift in trend, given the broader supply picture and the latest U.S. inventory data.
Tariff talk meets supply signals
On the supply side, Russia’s crude export program is pointing higher this month, with loadings from western ports projected above earlier plans.
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Greater seaborne flow from Primorsk, Ust-Luga, and Novorossiisk would add barrels into an already well-supplied Atlantic Basin, complicating any sustained price rebound unless geopolitical risk escalates further or demand surprises to the upside.
The Energy Information Administration said commercial crude stocks rose by 3.9 million barrels in the week ended Sept. 5, while gasoline inventories increased by 1.5 million barrels and distillates by 4.7 million.
Refinery runs eased but remained high for the season. The build in products suggests the post-summer slowdown is taking hold, a pattern that usually widens discounts for near-dated barrels and keeps rallies in check unless outages or storms intervene.
Investors also have an eye on OPEC+. The producer group has flagged a modest unwind of some voluntary curbs beginning in October, a step that would return part of the 2023 extra cuts to the market in measured increments.
Any easing would meet softening refinery demand into autumn and could add to inventory growth unless offset elsewhere. The signal helps explain why price gains faded intraday even as geopolitical news intensified.
What makes this week unusual is the collision of immediate risk and medium-term slack. War-adjacent events in the Middle East can lift insurance costs, divert ships, and tighten prompt supply if disruptions persist.
A separate debate over tariffs and price-cap enforcement aims to squeeze Russian revenue by raising costs for buyers or closing loopholes used by the shadow fleet.
Analysts say either avenue could support prices if changes are sweeping and durable, but markets usually wait for policy text before assigning a lasting premium.
Initial reactions tend to fade without clear physical impact, which is why futures still trade below early-summer averages despite the developments.
For corporate planners and fuel buyers, the message is to hedge the risk from breaking events but respect the balances.
If OPEC+ proceeds with even a partial supply return while U.S. inventories keep building, prompt spreads could soften further into shoulder season. If the Red Sea sees another run of vessel attacks or if policymakers unveil tougher, enforceable measures that materially curb Russian flows, the calculus flips.
In that scenario, prompt timespreads could firm and crack spreads could stabilize despite slower end-user demand.
The next checkpoints are straightforward: the weekly EIA report for confirmation of trend, clarity from OPEC+ on October implementation, and any concrete language from Brussels and Washington that would change the flow of barrels rather than the tone of the debate.
For now, oil’s climb looks like a classic risk premium repricing set against a market still defined by ample supply. The balance will turn only if war risks spill into barrels or tariff talk hardens into law.
