Oil Prices Near Four-Month Highs Amid Supply Tightening and Geopolitical Risks

In Asian trading, oil prices saw a slight uptick, lingering close to four-month highs fueled by notable reductions in U.S. gasoline inventories and drone attacks on a critical Russian fuel refinery.

These occurrences indicate a tightening of fuel supplies, propelling Brent and West Texas Intermediate crude futures to their highest levels since late November, following a surge of over 3% on Wednesday. However, concerns persist regarding sluggish demand from China and the possibility of sustained high interest rates, which have restrained further price increases, keeping crude within the range of $75 to $85 per barrel.

The drone strikes on a major Russian refinery by Ukrainian forces, causing significant disruptions to its operations, highlight the heightened geopolitical risks impacting oil supply, particularly amidst Russia's export restrictions and ongoing tensions. This, combined with substantial reductions in U.S. oil and gasoline inventories, suggests an improving demand outlook in the world's largest fuel consumer.

Despite record levels of U.S. crude production, these factors indicate a tightening of supplies.