Oil News: Geopolitical Premium Rises as Russia-Ukraine War Enters New Phase

Oil Prices Hold Steady as Geopolitical Tensions Counter U.S. Stock Builds

Crude oil futures are trading higher on Thursday, supported by heightened geopolitical risks stemming from the escalating Russia-Ukraine conflict. This price stability comes despite bearish pressure from a surprising increase in U.S. crude and gasoline inventories. Traders are closely monitoring developments for signals that could shift market sentiment.

At 11:13 GMT, Light Crude Oil futures are trading $70.00, up $1.25 or +1.82%.

Russia-Ukraine War Reignites Geopolitical Risk Premium

Oil prices gained traction this week following intensified missile exchanges between Russia and Ukraine, underscoring fears of potential disruptions to energy infrastructure. Ukraine’s use of U.S.-supplied ATACMS missiles marked a notable escalation, while Russia launched a long-range missile in response. The conflict’s impact on global oil supplies remains uncertain but has reintroduced a geopolitical risk premium into the market.

Energy analysts, including those from StoneX, note that while direct disruptions to Russian fuel exports remain limited, traders are pricing in the possibility of supply chain vulnerabilities. Some market participants, however, view additional sanctions or restrictions on Russian oil as less likely, given Moscow’s robust fuel exports.

EIA Reports Bearish Inventory Data

The latest Energy Information Administration (EIA) report revealed mixed signals for the oil market. U.S. crude inventories rose by 545,000 barrels to 430.3 million barrels for the week ending Nov. 15, exceeding expectations of a modest 138,000-barrel increase. Gasoline stockpiles climbed sharply, adding 2.1 million barrels versus forecasts of a 900,000-barrel rise, indicating weaker-than-expected domestic demand.

Distillate stocks, however, declined, providing a marginal offset to the bearish data. Analysts caution that rising inventories, coupled with lukewarm consumption trends, could weigh on prices unless offset by more significant supply-side disruptions.

OPEC+ and North Sea Supply Updates

On the supply side, OPEC+ appears poised to delay previously planned production increases due to persistent demand concerns. The group is set to meet on Dec. 1 to discuss output strategies, and any decision to maintain current production cuts could lend support to prices.

Additionally, Norway’s Equinor restored full capacity at its Johan Sverdrup oilfield in the North Sea after a temporary outage, stabilizing one of Europe’s key production hubs.

Market Forecast: Neutral to Bearish Outlook

Crude oil prices are expected to trade within a narrow range, with support near $68.52 and resistance at $70.72. While geopolitical risks provide a floor under prices, elevated U.S. inventories and weak demand may cap upward momentum. Hedge fund positions in WTI remain subdued, reflecting cautious sentiment among market participants.

Short-term market projections lean slightly bearish, barring any sudden escalation in supply disruptions or stronger-than-anticipated OPEC+ intervention. Traders should watch geopolitical developments and the upcoming OPEC+ meeting for potential market catalysts.