Investing.com-- Oil prices rose Wednesday, on course for a sixth consecutive session of gains, after U.S. crude stockpiles fell sharply below forecasts, adding to concerns about tighter global supply.
At 08:55 ET (12:55 GMT), Brent Oil Futures expiring in May traded 0.9% higher at $73.07 per barrel, and West Texas Intermediate (WTI) crude futures gained 1% to $69.67 per barrel.
U.S. crude stocks drop sharply
Both contracts hit their highest in three weeks in the previous session, after the American Petroleum Institute reported a significant drawdown of 4.6 million barrels in U.S. crude oil inventories for the week ending March 21, 2025, surpassing analysts’ expectations of a 2.5 million barrel decline.
The substantial drawdown in crude inventories indicates a strengthening in U.S. petroleum demand.
Market participants will closely monitor upcoming reports from the U.S. Energy Information Administration (EIA) for further confirmation of these trends and to assess their potential impact on future oil prices.
Venezuela tariffs support prices
Oil was further supported by President Trump’s Monday announcement, threatening to impose 25% tariffs on all imports from countries that purchase oil or gas from Venezuela, effective April 2.
This measure aimed to exert economic pressure on the Venezuelan government, led by President Nicolás Maduro, which the U.S. administration accuses of hostile actions and undermining democratic institutions.
Venezuela’s oil exports are a significant component of its economy, with China being its largest oil buyer.
The announcement has raised concerns about potential disruptions in global oil supply chains and has contributed to a modest increase in oil prices.
Russia-Ukraine truce talks limit gains
The U.S. brokered separate agreements on Tuesday with Ukraine and Russia to halt attacks at sea and on energy infrastructure.
As part of these deals, Washington committed to advocating for the lifting of certain sanctions on Moscow, particularly those affecting Russian agriculture and fertilizer exports.
If this extends to energy-related sanctions, Russia may be able to increase its oil sales on the global market. An influx of Russian crude would add to the overall supply, potentially driving prices lower.
"Russia insists that some conditions for the ceasefire are met before committing," said analysts at ING, in a note. "They include lifting some sanctions on Russian banks and companies involved in the trade of agricultural products. In addition, any increase in oil supply could be limited, as Russia diverted oil flows to other markets following Western sanctions, so having little impact on supply. It’s not entirely clear when the ceasefire would come into effect. That would depend on if and when Russia’s demands are met."
Another key factor is the reduced geopolitical risk premium. Oil prices often rise when conflicts threaten energy supply chains, particularly in regions with major energy exports like Russia. A pause in hostilities, even if temporary, diminishes concerns over supply disruptions.
(Ayushman Ojha contributed to this article.)