Oil prices surge 3% to 7-week high as surprise US stockpile draw adds to supply worries

Core Viewpoint - Oil prices have risen approximately 3% to a seven-week high due to a surprise drop in U.S. crude inventories and ongoing supply issues in Iraq, Venezuela, and Russia [1]. Group 1: Oil Price Movements - Brent futures increased by $1.68, or 2.5%, closing at $69.31 per barrel, while U.S. West Texas Intermediate (WTI) crude futures rose by $1.58, or 2.5%, settling at $64.99 [1]. - This marks the highest closing price for Brent since August 1 and for WTI since September 2 [1]. Group 2: U.S. Crude Inventories - U.S. crude inventories unexpectedly fell by 607,000 barrels last week, contrasting with a forecasted increase of 235,000 barrels [2]. - This decline is smaller than the 3.8 million-barrel draw reported by the American Petroleum Institute [2]. Group 3: Geopolitical Factors - Oil prices received support from reports of Ukrainian military actions targeting oil pumping stations in Russia's Volgograd region, leading to a state of emergency in Novorossiisk, a key Russian seaport [3]. - The focus has shifted back to Eastern Europe, with potential new sanctions on Russia being discussed [4]. - Ukraine's increased drone attacks on energy infrastructure are impacting Russian refinery operations and export revenues [4]. Group 4: Russian Economic Measures - Russia's finance ministry has proposed raising the value-added tax from 20% to 22% in 2026 to fund military spending amid a growing budget deficit [5]. - Russia is the second-largest crude producer in 2024, following the U.S., and is part of the OPEC+ alliance [5]. Group 5: U.S. Production Trends - Oil and gas production in key U.S. states, including Texas, Louisiana, and New Mexico, has seen a slight decline in the third quarter of 2025 [7].