Oil prices rose for a second consecutive session on Thursday, bolstered by concerns over supply disruptions stemming from U.S. sanctions on Russia, a sharper-than-expected decline in U.S. crude oil inventories, and an improving outlook for global demand.
By 0446 GMT, Brent crude futures increased by 25 cents, or 0.3%, to $82.28 per barrel, building on a 2.6% rise in the previous session that marked their highest level since July 26 of last year. Similarly, U.S. West Texas Intermediate (WTI) crude futures climbed 28 cents, or 0.4%, to $80.32 per barrel, following a 3.3% surge on Wednesday to their highest since July 19.
The Energy Information Administration (EIA) reported on Wednesday that U.S. crude oil stocks fell last week to their lowest level since April 2022, as exports increased and imports declined. The 2-million-barrel draw significantly exceeded the 992,000-barrel drop anticipated in a Reuters poll.
This decline contributed to a tightening global supply outlook, further strained by expanded U.S. sanctions on Russian oil producers and tankers. The new measures have prompted Russia’s major buyers to seek alternative sources of crude, while also driving up shipping costs. On Wednesday, the Biden administration announced hundreds of additional sanctions targeting Russia’s military industrial sector and related activities.
Despite the recent price rally, the Organization of the Petroleum Exporting Countries (OPEC) and its allies are likely to remain cautious about boosting production, according to Rory Johnston, founder of Commodity Context. “The producer group has faced frequent setbacks over the past year, making it more inclined to proceed cautiously before easing production cuts,” Johnston noted.
On the demand side, global oil consumption increased by 1.2 million barrels per day (bpd) during the first two weeks of 2025 compared to the same period last year, slightly below expectations, according to a JPMorgan report. Analysts project demand to grow by 1.4 million bpd year-on-year in the coming weeks, driven by heightened travel during major festivals in India and Lunar New Year celebrations in China at the end of January.
Additionally, some investors are speculating about potential interest rate cuts by the U.S. Federal Reserve later this year, spurred by data indicating easing core inflation. Such measures could support economic activity and boost energy demand.
Elsewhere, oil price gains were tempered by news of an agreement between Israel and Hamas to halt fighting in Gaza, involving a swap of Israeli hostages for Palestinian prisoners.
