Morning Highlights: Oil inches higher on Middle East tensions, U.S. inventory draw, and China data

Thursday, July 17, 2025

Oil prices rose slightly on Thursday, supported by signs of easing global trade tensions, stronger-than-expected economic indicators from major consumers, and renewed geopolitical risks in the Middle East.

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Market snapshot (as of 06:30 EST):

• Brent (September): $68.67 (▲$0.17)

• WTI (August): $66.69 (▲$0.31)

Both benchmarks are holding steady near the upper end of recent trading ranges, as supportive fundamentals offset signs of sluggish fuel demand growth.

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Middle East risk returns to focus

After weeks of calm, geopolitical tensions re-emerged following drone attacks on oilfields in Iraq’s Kurdistan region, which have curtailed output by up to 150,000 barrels per day, according to local officials.

Additionally, renewed Israeli strikes into Syria have reminded markets of the region’s instability.

“Any incident that deprives the market of barrels will be added to the low inventory narrative,” said John Evans at PVM Oil Associates. “We expect prices to continue to hold, with any risk being to the upside.”

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Trade tensions ease as Trump softens tone

Investor sentiment improved after President Donald Trump signaled flexibility on tariff policy, indicating lower rates for smaller countries and the possibility of new agreements with Europe and China.

Trump’s softened stance comes after weeks of uncertainty that had clouded the outlook for global economic growth and fuel demand.

“These are seen as positive developments for the global trade outlook,” said analyst Tina Teng.

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U.S. inventories point to stronger demand

The EIA reported a 3.9 million barrel draw in U.S. crude stocks last week, surpassing expectations and reflecting stronger refinery activity and tighter supply.

However, gasoline and distillate inventories rose more than expected, tempering bullish momentum. ANZ analysts noted the builds could reflect softer demand from U.S. summer travel.

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China, India fuel demand signals support prices

• China’s June crude oil throughput rose 8.5% year-on-year, signaling strong domestic fuel demand.

• India, meanwhile, is confident it can maintain supply levels even if U.S. sanctions disrupt purchases of Russian oil.

India’s Oil Minister Hardeep Singh Puri said the country had diversified its oil sourcing, now buying from around 40 countries, up from 27 prior to the Ukraine war.

“I’m not worried at all. If something happens, we’ll deal with it,” Puri said at an industry event.

Russia remains India’s top supplier, but refiners say they are ready to pivot back to pre-war sourcing patterns if necessary.

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Factors to watch

• Ongoing developments in the Middle East, especially further infrastructure attacks.

• U.S. fuel demand trends amid mixed inventory data.

• Progress in U.S.-China and U.S.-EU trade negotiations ahead of the August 1 tariff deadline.

• Potential follow-through on Trump’s 50-day deadline for Russia to end the Ukraine conflict.

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Oil remains well-supported by tight inventories and strong demand signals from Asia, while geopolitical risk and trade policy headlines continue to inject volatility. With refinery activity climbing and supply disruptions resurfacing, the path of least resistance may remain to the upside—unless demand signals falter further.