Oil prices edged higher on Wednesday as investors anticipated a U.S. Federal Reserve interest rate cut while assessing the potential supply impacts of new Western sanctions on Russia. Brent crude hovered above $73.5 per barrel, and West Texas Intermediate (WTI) traded above $70, supported by geopolitical risks and decline in U.S. crude inventories.
The Federal Reserve is expected to announce its third interest rate cut of the year, with markets also seeking guidance on rate projections for 2025. Lower rates could spur economic growth and oil demand. However, uncertainties surrounding the return of Donald Trump, who has signaled policies favoring domestic energy production, are causing caution among traders. Markets will closely watch how swiftly Trump acts to boost U.S. crude output.
Meanwhile, sanctions on Russia continue to shape the oil market. The European Union imposed measures against 33 shadow fleet vessels used to transport Russian crude, while Britain sanctioned 20 ships accused of carrying illicit oil. Despite these actions, Russia remains active in the global oil trade, limiting the sanctions’ immediate impact.
In the U.S., crude stocks fell by 4.69 million barrels last week, marking a fourth consecutive weekly decline if confirmed by official data. However, gasoline inventories rose by 2.45 million barrels, highlighting mixed signals in demand trends. Analysts projected a smaller draw of 1.6 million barrels.
Oil markets remain range-bound, with Brent and WTI trading between $70 and $75 per barrel in recent months. Geopolitical tensions in the Middle East and Europe, coupled with subdued Chinese demand and robust non-OPEC+ production, have kept prices steady but unremarkable. For the near term, cautious optimism prevails as traders weigh central bank policy signals, geopolitical developments, and evolving supply-demand dynamics.