Global oil prices increased on Wednesday as energy markets reacted to potential supply disruptions from a tropical storm moving toward the U.S. Gulf Coast and reports of drone attacks targeting oil infrastructure in Saudi Arabia. The upward pressure on prices was moderated by a planned increase in production from major oil-exporting nations.
Brent crude futures, the international benchmark, settled at $72.25 a barrel, an increase of $1.59, or 2.2%, for the day. U.S. West Texas Intermediate (WTI) crude futures closed at $68.36 a barrel, rising by 82 cents, or 1.2%.
In the Gulf of Mexico, energy companies began evacuating personnel and shutting down production platforms in anticipation of Tropical Storm Ida. The U.S. National Hurricane Center reported that the storm was expected to strengthen into a major hurricane before making landfall on the U.S. coast this weekend.
According to the U.S. Bureau of Safety and Environmental Enforcement (BSEE), operators had shut in nearly 59% of crude oil production and 49% of natural gas production in the Gulf of Mexico by midday Wednesday. The region accounts for approximately 17% of total U.S. crude oil production.
Adding to supply concerns, Saudi Arabian state media reported on Wednesday that the kingdom’s air defenses intercepted an armed drone launched toward the city of Khamis Mushait. In a separate statement, a military spokesperson for Yemen’s Houthi movement said the group had targeted an airport in the region. These events followed earlier reports of attempted attacks on other Saudi energy facilities.
The market balanced these developments against a decision by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+. The group has maintained its plan to increase oil output by 400,000 barrels per day each month from August to December. This scheduled increase in supply is intended to meet rising global demand as economies recover from the COVID-19 pandemic.
U.S. government data released Wednesday also influenced trading. The Energy Information Administration (EIA) reported that U.S. crude oil stockpiles fell by 3 million barrels last week, a larger draw than analysts had forecast. However, the same report showed that U.S. gasoline stocks unexpectedly rose, indicating potentially uneven fuel demand.
