Morning Highlights: Oil steadies as traders weigh Ukraine war escalation and U.S. stock draws

Wednesday, August 27, 2025

Oil prices held steady early Wednesday after a sharp decline in the previous session, as investors weighed escalating Russian attacks on Ukrainian energy infrastructure against U.S. industry data showing falling crude inventories.

Market snapshot (as of 6:15 EST):

Brent (Oct): $67.10 (-$0.12)

WTI (Oct): $63.11 (-$0.14)

Both benchmarks fell more than 2% on Tuesday, pulling back from their highest levels since early August.

Geopolitical backdrop: escalating Russia–Ukraine strikes

Russia launched its largest drone assault in weeks overnight, hitting gas and power infrastructure across six Ukrainian regions and leaving more than 100,000 people without electricity. The Ukrainian Air Force said it downed 74 of 95 drones, but 21 struck key facilities in Poltava, Sumy, and Kharkiv.

Ukraine’s energy ministry said the attacks were part of Moscow’s “deliberate policy of destroying civilian infrastructure ahead of the heating season.” Russian refineries have also been hit by Ukrainian strikes, forcing Moscow to increase crude exports from western ports by 200,000 bpd in August.

Inventory support offsets bearish sentiment

The American Petroleum Institute reported declines across U.S. crude, gasoline, and distillate inventories last week, lending some support to prices. Official EIA data is due later today at 14:30 GMT. “The API report is helping prices stabilize,” said Tamas Varga of PVM Oil Associates.

Crude: -0.974M

Cushing: -0.497M

Gasoline: -2.060M

Distillates: -1.488M

Analysts flag surplus risk

Goldman Sachs sees Brent slumping into the low $50s next year on expectations of a 1.8 million bpd surplus by late 2025. The IEA projects global supply growth of 2.1 million bpd this year, outpacing demand growth of just 700,000 bpd, leaving a 1.4 million bpd glut. Hedge funds have pared bullish crude bets to their lowest levels in 16 years, Bloomberg noted, reflecting receding fears of new U.S. sanctions on Russian oil.

Outlook

Traders remain caught between near-term geopolitical risks and longer-term surplus forecasts. While Ukrainian strikes on Russian refineries and Moscow’s retaliatory drone attacks highlight fragile supply dynamics, the broader market narrative is shifting toward oversupply into year-end.