Oil climbed for a third session as investors weighed President Donald Trump’s next moves to penalize Russia for its war in Ukraine, raising concerns over crude supplies from the region.
West Texas Intermediate rose 1.7% to settle below $64 a barrel, the highest settlement price in a week. The commodity had a knee-jerk reaction after Trump questioned Russia’s incursion into Polish airspace in a social media post. The second line — “Here we go!” — spurred traders to cover short positions in the event that the US leader moves forward with penalties on Russian energy soon.
“The read-through is that Trump–Putin relations are deteriorating rather than improving, which raises the odds of some kind of response,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group.
The post comes after Trump told European Union officials he’s willing to add new tariffs on India and China, the top importers of Russian crude, in an effort to get Moscow to negotiate with Ukraine — but only if EU nations do so as well.
Oil traders are also weighing the fallout from Israel’s strike in Doha and the outlook for US interest rates.
US producer prices unexpectedly declined, adding to the case for the Federal Reserve to cut borrowing costs, potentially helping support energy demand.
Meanwhile, Israel attacked military bases in Yemen manned by Houthi operatives, a day after the country targeted Hamas leaders in Qatar’s capital Tuesday. The move threatens to derail US-led efforts to end the Middle East conflict. Israel has claimed full responsibility, while Trump distanced himself from the strike.
Dueling Forces
US oil has been largely stuck between $62 and $67 for more than a month now, with expectations of a glut toward the end of 2025 hanging over the market. Still, the unrest from Poland to Qatar has reignited concerns about an escalation of hostilities, which has added a geopolitical risk premium back into crude prices.
WTI’s prompt spread — the difference between its two closest contracts — closed at its weakest level since April on Wednesday, reflecting a softening domestic market. A US government report showed crude inventories rose by 3.9 million barrels, significantly more than expected, while product inventories also swelled.
In contrast, options markets saw a small move upward in the cost of bullish calls. Periods of elevated geopolitical risk have generally been most clearly priced in the options space.
US “crude exports will rebound in the weeks ahead, while refinery runs begin their seasonal swoon,” said Matt Smith, Americas lead oil analyst at market intelligence firm Kpler.