Crude oil futures surged in European trading on Wednesday morning, as escalating geopolitical tensions surrounding Russia continued to influence market sentiment.
At 0940 GMT, January 2025 ICE Brent futures were priced at $73.70 per barrel, marking a slight increase from Tuesday’s settlement of $73.31. Meanwhile, January 2025 NYMEX WTI futures traded at $69.73 per barrel, up from the previous day’s close of $69.24. The December 2024 contract, which is nearing expiration, stood at $69.93.
The sharp upward movement in prices came amid mounting concerns over the conflict between Russia and Ukraine. Moscow has vowed to retaliate after Ukraine fired a U.S.-supplied long-range missile into Russian territory, shortly after the Biden administration eased restrictions on its use. The Kremlin further heightened tensions by announcing a shift in its nuclear doctrine, declaring that any aggression by a non-nuclear state against Russia, involving a nuclear state, would be regarded as a joint attack, potentially triggering nuclear escalation.
U.S. officials confirmed the use of the Army Tactical Missile System (Atacms) by Ukraine in an interview. This follows Moscow’s extensive strikes on Ukraine’s power grid over the weekend, deepening the conflict’s impact on global energy markets.
The situation grew even more volatile on Wednesday after the U.S. embassy in Kyiv was evacuated following credible intelligence of a potential airstrike, according to a statement from the U.S. Department of State’s Consular Affairs on X (formerly Twitter).
While crude prices surged to their highest levels in over a week, there has yet to be any significant disruption to global energy flows. However, analysts are increasingly concerned about the risk to Europe’s natural gas supplies should the conflict intensify. Russia has suggested it may retaliate through proxy groups, such as Yemen’s Houthi rebels, exacerbating fears of energy shortages.
On the broader geopolitical front, the latest United Nations report revealed that Iran continues to build its stockpile of enriched uranium, although it is reportedly seeking a deal to limit further enrichment in exchange for sanctions relief. In contrast, the incoming administration of former President Donald Trump is expected to push for stricter enforcement of sanctions, which could further restrict oil and condensate exports.
Despite these concerns, investors largely ignored inventory data, as geopolitical developments took center stage. The American Petroleum Institute (API) reported a substantial increase of 4.75 million barrels in crude oil stockpiles, well above the anticipated build of 1 million barrels. However, this increase was partially offset by draws in gasoline and distillates. Official inventory figures from the U.S. Energy Information Administration (EIA) are due later on Wednesday.
As the situation continues to evolve, market participants will be closely monitoring any shifts in geopolitical dynamics that could further disrupt global energy markets.
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