Crude oil prices rose modestly on Wednesday as geopolitical tensions lifted sentiment, but analysts cautioned that growing supply will limit further gains.
Brent crude oil, against which Nigerian oil is priced, gained 56 cents or 0.8 percent to $66.95 a barrel as of 09:35 a.m. in Nigeria, while U.S. West Texas Intermediate (WTI) crude oil rose 56 cents or 0.9 percent to $63.19 a barrel.
Both benchmarks had rallied nearly 2 percent immediately after Israel announced an attack on Hamas leadership in Doha but later retraced much of those gains.
The market also reacted to reports that Poland shot down drones during a Russian attack in western Ukraine, the first time a NATO member directly engaged in the conflict.
Meanwhile, the United States pushed for new sanctions on buyers of Russian crude, targeting China and India.
Despite the geopolitical risk, market participants pointed to oversupply concerns as the dominant factor.
Analysts at SEB noted that Brent remains $2 lower than last Tuesday, saying, “The dark cloud of surplus ahead is hanging over the market. Geopolitical risk premiums in oil rarely last long unless actual supply disruption kicks in.”
The U.S. Energy Information Administration (EIA) warned that rising inventories and increased output from OPEC+ members will put global crude prices under pressure in the coming months.
Industry data from the American Petroleum Institute showed that U.S. crude, gasoline, and distillate stocks all rose last week, with official figures due later on Wednesday.
Traders are also watching the U.S. Federal Reserve, with expectations of an interest rate cut at its September 16–17 meeting.
While lower rates could stimulate demand, analysts say the supply outlook remains bearish and may cap any rally.
