Oil hit seven-week high on supply concerns and geopolitical tensions

Oil prices surged to their highest levels in weeks on Wednesday, buoyed by tightening supply signals and rising geopolitical risks.

Brent settled $1.68 higher, or 2.5%, at $69.31 a barrel, the strongest close since August 1. 

WTI also gained $1.58, or 2.5%, to $64.99, its highest since September 2.

The rally followed a surprise draw in US crude inventories, which fell by 607,000 barrels last week, according to the Energy Information Administration. Analysts polled by Reuters had expected a build of 235,000 barrels.

Supply concerns were further amplified by export disruptions in Iraq, Venezuela, and Russia. Meanwhile, the US sharpened its rhetoric against Moscow, urging NATO allies to shoot down Russian aircraft that violate their airspace and warning Europe to reduce its energy reliance on Russia.

The bullish momentum persisted even as Iraq’s federal and Kurdish regional governments reached agreements in principle with eight international oil companies to resume crude exports from Iraqi Kurdistan, an industry group said.

Written: Farid Muzaffar