Crude oil prices settled higher on Wednesday by more than $1 a barrel as investors worried about possible supply disruptions, with Brent crude futures gaining $1.10 or 1.7 per cent to sell at $67.49 a barrel, and the US West Texas Intermediate (WTI) crude futures rising by $1.04 or 1.7 per cent to settle at $63.67 a barrel.
The prices of both crude benchmarks got a boost after Poland downed drones in its airspace and the US pushed for new sanctions on buyers of Russian oil the day after an Israeli attack in Qatar.
Poland shot down suspected Russian drones in its airspace on Wednesday with the backing of aircraft from its NATO allies, the first time a member of the Western military alliance is known to have fired shots during Russia’s war in Ukraine.
On Tuesday, prices had settled 0.6 per cent higher after Israel said it had attacked leadership of the Palestinian militant group Hamas in Doha. But, there was no immediate threat of oil supply disruption.
Reuters reported that US President Donald Trump has urged the European Union to impose 100 per cent tariffs on China and India – major buyers of Russian oil – as a strategy to pressure the country to enter peace talks with Ukraine
European leaders, who have been trying to persuade Trump to join them in tightening sanctions on Russia and boosting support for Ukraine, said the Poland development justified a collective response.
Slovenia, Denmark, Greece, France, and Britain have asked the United Nations Security Council to meet on Friday over what they deemed Russian violations of Polish airspace.
European Commission chief Ursula von der Leyen said on Wednesday the bloc was considering a faster phase-out of Russian fossil fuels as part of new measures aimed at the Vladimir Putin-led country.
However, the 27-member bloc is very unlikely to impose crippling tariffs on India or China.
There are also expectations that the Federal Reserve will cut US interest rates at its September 16-17 meeting, which could boost economic activity and demand for oil.
Crude oil inventories in the United States increased by 3.9 million barrels during the week ending September 5, after falling 2.4 million barrels in the week prior, according to data from the US Energy Information Administration (EIA) released on Wednesday. The build brings commercial stockpiles to 424.6 million barrels according to government data, which is 3 per cent below the five-year average for this time of year.
This follows figures from the American Petroleum Institute (API) that were released a day earlier, which suggested that crude oil inventories expanded by a more modest 1.25 million barrels.