Oil prices closed with gains due to tensions in the Middle East.
U.S. crude oil reserves dropped by 3.4 million barrels last week, according to government data. This decline was more than triple the 1.1 million barrels expected by analysts in a Reuters survey.
Oil prices rose nearly 3% on Wednesday, recovering from seven-week lows, after the assassination of a Hamas leader in Iran heightened Middle East tensions, and due to a significant drop in U.S. crude inventories.
Brent crude futures for September delivery rose by $2.09, or 2.66%, to $80.72 per barrel, while U.S. West Texas Intermediate (WTI) crude futures gained $3.18, or 4.26%, to $77.91 per barrel.
The drop in U.S. crude oil reserves marked the fifth consecutive week of declines, the longest streak since January 2021. Strong exports have helped offset lower refining activity and robust imports, leading to this sustained reduction in inventories. Geopolitical risk remains the main driver of the price increase.
The day before, Brent and WTI had both lost about 1.4%, closing at their lowest levels in seven weeks. This decline followed last week’s drop due to expectations of a ceasefire agreement in Gaza that could ease Middle East tensions and related supply concerns.
However, tensions in the region escalated overnight with news that Hamas leader Ismail Haniyeh was assassinated in Iran, a day after the Israeli government claimed to have killed Hezbollah’s highest-ranking commander in an airstrike on Beirut, in retaliation for Saturday’s rocket attack on Israel.
In July, Brent and WTI recorded their biggest monthly loss since October, due to expectations that OPEC+ would maintain its current production agreement and begin to unwind some production cuts starting in October.
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