Crude oil futures rebounded early on Wednesday, underpinned by escalating geopolitical tensions as the United States renewed tariff threats against India over its continued imports of Russian crude.
This has injected uncertainty around supply levels as any sanctions could limit the availability of crude on the market.
However, gains could be capped given OPEC+’s recent decision to increase production by 547,000 barrels per day in September, as the group unwinds its previous output cuts.
Meanwhile, demand fundamentals continue to cloud the oil outlook. Slowing growth in key economies, notably China’s manufacturing contraction and weak U.S. labor market data, has tempered expectations for strong oil consumption.
Market participants now await official figures from the U.S. Energy Information Administration for further clarity. The market could react to the data after the API figures showed a larger-than-expected draw. A strong decline in inventories could add to the market’s rebound.
