US Oil Prices Extend Gains as Demand Strengthens and Global Risks Rise

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Oil prices continue their upward climb, supported by signs of resilient demand in the United States and mounting geopolitical tensions. Brent crude advanced to a two-week high of around $67 per barrel, while U.S. West Texas Intermediate (WTI) settled near $63. The latest data from the U.S. Energy Information Administration shows sharp declines in crude and gasoline inventories, with jet fuel consumption hitting its strongest four-week average since 2019. The trend underscores the impact of market forces and consumer-driven demand on energy pricing.

The strong demand picture has reinforced confidence among market participants. Commodity strategist Daniel Hynes noted that the backdrop of constrained supply and rising consumption has kept sentiment positive. However, investors remain cautious given the uncertainty surrounding peace talks in Ukraine and broader geopolitical risks that continue to weigh on market stability. Analysts highlight that efficient market responses, rather than government intervention, are key to balancing supply and demand.

At the same time, U.S. trade policies have added further tension. Washington’s decision to impose tariffs on Indian goods in response to New Delhi’s continued purchases of Russian oil has created unease. Despite this, Indian refiners are expected to resume buying discounted Russian crude in the months ahead, underscoring the complex ties between economic interests and political pressure. Observers argue that free-market transactions and voluntary economic choices will ultimately determine energy flows.

Meanwhile, new supply developments in Europe have caught the industry’s attention. Norwegian energy company Aker BP announced a significant oil discovery in the Yggdrasil field, part of its Omega Alfa campaign in the North Sea. The deposit is estimated to contain between 96 million and 134 million barrels of oil equivalent, making it one of the most important finds in the region in the past decade. The field is jointly held by Aker BP, Equinor, Orlen, and Petoro. Aker BP chief executive Karl Johnny Hersvik highlighted the potential of the discovery to unlock further resources in surrounding areas and strengthen Norway’s role as a key energy supplier. 

In Eastern Europe, the ongoing conflict in Ukraine continues to disrupt Russia’s fuel supply chain. Ukrainian drone strikes have repeatedly targeted Russian oil refineries and railway infrastructure, leading to shortages and pushing up domestic fuel prices. Since July, the cost of Russia’s A95-grade petrol has surged by more than 50 percent, reaching above ₽82,000 per tone. Retail fuel prices have risen nearly nine percent year-on-year, leaving consumers in remote regions such as Crimea and Zabaykalsky facing supply constraints.

Moscow has attempted to stabilize the market by suspending petrol exports, a move aimed at protecting domestic supply. Despite these efforts, analysts warn that shortages are likely to persist into September. However, with diesel inventories more stable, most industry observers believe the situation will not escalate into a full national crisis. Experts note that over-reliance on government interventions often complicates energy markets, highlighting the value of private sector solutions.

Taken together, these factors highlight the delicate balance in today’s oil market. Robust U.S. demand and declining inventories are tightening the near-term outlook, while fresh discoveries in Norway promise longer-term supply growth. Yet ongoing geopolitical risks, from trade disputes to conflict-driven disruptions, remain powerful forces shaping the direction of prices. 

With OPEC+ monitoring conditions and peace negotiations in Ukraine still unresolved, the market faces weeks of uncertainty. For traders and policymakers alike, the challenge is to prepare for a period defined by both strong consumption and fragile geopolitical stability. Observers argue that limited government interference allows markets to adjust more efficiently in response to these global pressures.