Oil rises on large draw from US crude stocks, Russia sanctions impact; Gaza ceasefire deal capped gains

Oil prices rose about 2% on Wednesday on a large draw in U.S. crude stockpiles and potential supply disruptions from new U.S. sanctions on Russia, while a temporary halt to the war in Gaza limited the gains.

Brent crude futures were up $1.55, or 1.94%, at $81.47 a barrel by 12:05 p.m. EST (1705 GMT). U.S. West Texas Intermediate crude was up $2.02, or 2.61%, at $79.52.

U.S. crude oil inventories fell to their lowest level since 2022 as exports rose and imports fell, according to data released on Wednesday from the U.S. Energy Information Administration (EIA). Gasoline and distillates rose more than expected during the week.

"The crude oil draw was largely on import-export dynamics," said Bob Yawger, director of energy futures at Mizuho. "The exports are hard to believe," he added, pointing to the fact that many were booked before the sanctions announcement.

The latest round of U.S. sanctions on Russian oil could disrupt Russian oil supply and distribution significantly, the International Energy Agency said in its monthly oil market report on Wednesday.

A fresh round of sanctions angst seems to be supporting prices, said Ole Hansen, head of commodity strategy at Saxo Bank. "Tankers carrying Russian crude seem to be struggling offloading their cargoes around the world, potentially driving some short-term tightness," he added.

Limiting the gains, Israel and Hamas agreed to a deal to halt fighting in Gaza and exchange Israeli hostages for Palestinian prisoners, opening the way to a possible end to a 15-month war that has upended the Middle East.

Meanwhile, OPEC expects global oil demand to rise by 1.43 million barrels per day in 2026, maintaining a similar growth rate to 2025, the producer group said on Wednesday.

The 2026 forecast aligns with OPEC's view that oil demand will keep rising for the next two decades. That is in contrast with the IEA, which expects demand to peak this decade as the world shifts to cleaner energy.

U.S. consumer prices rose slightly above expectations in December, heightening expectations for more interest rate cuts by the Federal Reserve.

Lower interest rates can boost economic growth and demand for oil.