Oil prices saw a significant uptick as rising geopolitical tensions between Russia and Ukraine overshadowed the impact of a larger-than-expected increase in U.S. crude inventories.

Brent crude futures rose by 96 cents, or 1.3%, to $73.77 per barrel as of 1017 GMT, while U.S. West Texas Intermediate (WTI) crude gained 99 cents, or 1.4%, to $69.74 per barrel. Prices had initially risen by more than $1 earlier in the day.

Russia-Ukraine Conflict Escalates The uptick in oil prices followed missile strikes between Russia and Ukraine. Ukraine launched British-made cruise missiles at Russian territory on Wednesday, the latest Western weapon Kyiv has been allowed to use, following a U.S. missile strike a day earlier. Russia retaliated on Thursday, launching an intercontinental ballistic missile at Ukraine—marking the first use of such a powerful, long-range missile in the ongoing war.

Ukraine has increasingly targeted Russian military infrastructure, and this escalation raises concerns over the security of oil supplies, particularly if Ukraine were to target Russian energy infrastructure.

OPEC+ Concerns and U.S. Inventory Data Despite the geopolitical concerns, oil market sentiment was tempered by a rise in U.S. crude inventories. The Energy Information Administration (EIA) reported an increase of 545,000 barrels in U.S. crude stocks for the week ending November 15, bringing inventories to 430.3 million barrels, which exceeded analysts' expectations. Gasoline inventories also saw a larger-than-expected rise, while distillate stockpiles posted a draw.

On the production side, there is growing speculation that OPEC+ may delay its planned output increases. The group, which includes OPEC members and allies like Russia, is meeting on December 1 and may push back planned output increases due to weak global oil demand. Initially, OPEC+ had intended to reverse production cuts gradually from late 2024 through 2025. However, the International Energy Agency (IEA) has forecast that even with these cuts, oil supply will still outpace demand by 2025, leading to uncertainty over future price trends.

As geopolitical risks continue to cloud the market and supply dynamics remain unpredictable, oil prices are likely to remain volatile in the near term.