A series of geopolitical events pushed prices higher by raising concern that oil supplies could be disrupted, even though no disruptions were imminent. The Obama Administration announced new sanctions against Russian energy firms after the market closed on Wednesday, including against Rosneft, Russia's biggest oil producer. While analysts say it is unlikely to cause any dip in production or exports in the short term, it could prevent or delay future exploration and production.
The crash of a Malaysian Airlines passenger plane over Ukraine — which Ukrainian officials said was shot down — raised the risk of a sharper conflict between Ukraine and Russia that could lead to even tighter sanctions against Russia. And fighting in the Gaza strip intensified after a shaky cease-fire expired, yet another source of turmoil in the Middle East, the world's most important oil-producing region.
"Although oil balances will not be impacted, it gives the oil complex another reason to inject some geopolitical risk premium," wrote energy analyst Jim Ritterbusch in a research note to investors.
The jitters about potential disruptions came on the heels of a surprisingly large decline in supplies in the U.S. On Wednesday, the Energy Information Administration said U.S. crude oil inventories fell by 7.5 million barrels to 375 million barrels in the week of July 11. The fall was more than double what analysts had expected, and reversed what had been a three-week slide in prices.
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