Oil News: Crude Oil Futures Rebound on Bullish Inventory and India Sanctions Risk

Crude Oil Climbs on U.S. Threats Against India and Large Inventory Draw

Crude oil rebounded sharply Wednesday, lifting off a five-week low as geopolitical tension and bullish inventory data reignited buying interest. NYMEX WTI futures rose by $1.11 to settle at $66.27, up 1.70%, after four consecutive sessions of losses.

The turnaround came after former U.S. President Donald Trump issued fresh threats to impose higher tariffs on India over its continued purchases of Russian crude. The announcement triggered concerns over possible supply rerouting and broader diplomatic strains, particularly as India and China remain the largest buyers of Russian oil.

OPEC’s Balance Under Threat if Indian Flows Shift

Analysts are divided on whether India will reduce Russian crude imports, but there’s consensus that any shift would disrupt current OPEC+ market share calculations. “India has been making supernormal profits buying discounted Russian barrels,” noted Panmure Liberum’s Ashley Kelty. “It’s unlikely they’ll walk away entirely.”

Nonetheless, the political pressure raises the risk of reduced Indian demand for Russian flows, and traders are recalibrating their expectations for non-OPEC supply streams. With OPEC watching closely, any change in Asia’s import behavior could influence future output strategy.

U.S. Crude Inventory Draw Surprises to the Upside

Adding to the bullish sentiment was data from the American Petroleum Institute showing a 4.2 million barrel draw in U.S. crude inventories, far exceeding expectations of a 600,000-barrel decline. UBS analyst Giovanni Staunovo said the stock draw reinforced short-term support, especially as markets were already weighing supply concerns from the U.S.-India standoff.

The drawdown suggests demand remains firm despite recent price weakness, providing a supportive backdrop for crude into the weekly EIA numbers.

Russian Oil Flows in Focus as Peace Deadline Nears

A last-minute diplomatic push by U.S. envoy Steve Witkoff in Moscow just ahead of Trump’s peace deadline adds another layer of geopolitical uncertainty. Roth Capital Markets highlighted that while the Russia-Ukraine outlook remains murky, “the threat of escalating tariffs is likely to keep oil prices supported.”

Even so, their base case is for limited disruption to Russian exports, with China expected to absorb any barrels that India may forego, maintaining a stable baseline of Russian crude on the market.

Market Outlook: Bullish Near-Term Bias Holds

Technically, WTI bounced off support near the $65.38 long-term pivot, reclaiming ground above both the 50-day ($65.20) and 200-day ($64.09) moving averages. Immediate resistance stands at $67.31, with stronger overhead supply at $70.51.

With political pressure on India and bullish U.S. inventory data in play, the short-term oil prices forecast leans bullish. However, upside could remain capped unless the Russia sanctions situation escalates further.

More Information in our Economic Calendar.