Oil prices advanced by over $1 on Thursday, with persistent drone strikes targeting oil fields in Iraqi Kurdistan for the fourth consecutive day pointing to heightened geopolitical risk in the volatile region.
Brent crude futures settled up $1.00, or 1.46 per cent, at $69.52 a barrel. Concurrently, U.S. West Texas Intermediate (WTI) crude futures finished at $67.54 a barrel, recording an increase of $1.16, or 1.75 per cent.
Iraqi officials have indicated that Iran-backed militias are the likely perpetrators of this week’s attacks on the oilfields in Iraqi Kurdistan, although no specific group has yet claimed responsibility. These assaults have severely impacted the semi-autonomous Kurdistan region’s oil output, slashing production by between 140,000 and 150,000 barrels per day (bpd). This represents more than half of the region’s normal output of approximately 280,000 bpd, according to two energy officials.
“Some of the gains are a reaction to drone attacks in Iraq,” noted Andrew Lipow, president of Lipow Oil Associates. He added, “It shows how vulnerable oil supplies are to attacks using low technology.”
Beyond the immediate impact of regional instability, oil markets remain on edge due to the impending imposition of tariffs by U.S. President Donald Trump. Analysts noted that these tariffs could shift global oil supply routes, potentially diverting U.S. crude to major consumers like India and China.
President Trump has indicated that letters notifying smaller countries of their new U.S. tariff rates would be dispatched shortly. He has also hinted at potential trade breakthroughs, alluding to prospects of a deal with Beijing concerning illicit drugs and a possible agreement with the European Union.
“Near-term prices are set to remain volatile due to the uncertainty over the final scale of U.S. tariffs and the resultant impact on global growth,” commented Ashley Kelty, an analyst at Panmure Liberum, underscoring the broader economic implications.
Adding to the upward pressure on prices, government data released on Wednesday revealed a significant draw in U.S. crude inventories. Stockpiles fell by 3.9 million barrels last week, far exceeding analysts’ expectations for a modest 552,000-barrel draw in a Reuters poll.
This inventory decline reinforces recent observations from the International Energy Agency (IEA), which stated last week that increases in global oil output were not leading to higher inventories, suggesting a market with strong demand. Phil Flynn, senior analyst for Price Futures Group, highlighted that markets continue to search for clear signals of tighter supply or heightened demand to guide price movements.
Meanwhile, a tropical disturbance in the northern Gulf of Mexico was not expected to develop into a named storm as it tracked west before making landfall in Louisiana later on Thursday. The U.S. National Hurricane Center forecasted approximately four inches (10 cm) of rainfall in Southeast Louisiana, but no significant disruption to offshore oil and gas operations was anticipated.
