Oil falls as investors weigh impact of escalating geopolitical tensions

Oil fell on Wednesday as investors weighed the impact of escalating geopolitical tensions over the war between Ukraine and Russia, along with rising U.S. crude and gasoline inventories.

Brent crude futures fell 50 cents, or 0.68%, to settle at $72.81 a barrel.

U.S. crude futures fell 52 cents, or 0.75%, to settle at $68.87 a barrel, according to Reuters.

Escalating geopolitical tensions between Russia and Ukraine and the resulting concerns about potential disruptions to oil supplies have limited the decline in crude prices this week, according to CNBC.

“These supply risks are certainly providing support here and offsetting concerns about the outlook for global demand to some extent,” said John Kilduff, partner at Again Capital in New York.

As tensions between Russia and Ukraine continue to escalate, the latter fired a number of British Storm Shadow cruise missiles at Russia on Wednesday, the latest weapon that the West has allowed Ukraine to use on Russian targets, a day after it fired US-made ATACMS missiles.

This comes at a time when the US vetoed a UN Security Council resolution on Wednesday calling for a ceasefire in Gaza, which increased the war risk premium on oil prices amid concerns about potential disruptions to global supplies amid the ongoing war in the Middle East.

John Kilduff said: “The market is very nervous that something is going to happen with another escalation between the Israelis and the Iranians.”

Global supply could come under further pressure, with the possibility of the OPEC+ alliance deciding to delay production increases again at its meeting scheduled for December 1 due to weak global demand for oil, according to what three sources familiar with the discussions told Reuters.

In another context, data from the US Energy Information Administration revealed that US crude and gasoline inventories increased more than expected during the week ending November 15, which reduced the impact of the support provided by supply concerns.