Saxo Bank analyst Ole Hansen commented, "The escalation between Russia and Ukraine has amplified geopolitical tensions beyond levels seen in the year-long Israel-Iran conflict." Russian President Vladimir Putin stated that Russia would continue testing its new Oreshnik hypersonic missile in combat, including a recent missile strike on Ukraine, which was prompted by Ukraine’s use of U.S. and U.K. missiles against Russia. PVM analyst John Evans noted that markets fear the potential for accidental damage to oil, gas, and refining infrastructure, which could exacerbate the conflict.

In the U.S., new sanctions were imposed on Russia's Gazprombank as President Joe Biden sought to increase pressure on Moscow ahead of his term’s end. The Kremlin responded, claiming the sanctions were designed to hinder Russian gas exports but insisted that solutions would be found. The U.S. also imposed bans on imports of food, metals, and other goods from about 30 Chinese companies linked to forced labour involving Uyghurs.

China, the world's largest oil importer, introduced new policies to support energy product imports and boost trade, amid concerns over potential tariffs from President-elect Donald Trump. Analysts and traders expect China’s crude oil imports to rebound in November. India, the third-largest oil importer globally, also saw a rise in oil imports as domestic consumption increased, according to government data.

Pressure on Prices from Economic Data
However, European economic data capped oil price gains. The eurozone saw a surprising decline in business activity, with the services sector contracting and manufacturing deepening into recession. Conversely, the U.S. S&P Global Composite PMI Output Index rose to its highest level since April 2022, driven largely by the services sector.

The divergence in economic performance between the U.S. and Europe contributed to the U.S. dollar reaching a two-year high against other currencies. A stronger dollar makes oil more expensive in other countries, potentially reducing demand.

In Germany, the eurozone’s largest economy, third-quarter growth was revised downwards, signalling further economic challenges.

(ET)