Crude oil climbs on supply jitters as Russia-Ukraine war escalates

Oil climbed more than 1% on Thursday as Russia and Ukraine launched missiles at each other, an escalation of the war that fed supply worries despite a bigger-than-expected increase in U.S. crude inventories.

Ukraine said Russia fired what appeared to be an intercontinental ballistic missile at the city of Dnipro on Thursday. If correct, this would be the first use in war of a weapon designed to deliver long-distance nuclear strikes.

Ukraine fired U.S. and British missiles at targets inside Russia this week despite warnings by Moscow that it would see such action as a major escalation.

Brent crude futures rose $1.02, or 1.4%, to $73.85 by 11:30 AM ET (1630 GMT). U.S. West Texas Intermediate crude futures rallied $1.01, or 1.4%, to $69.76.

"While the current demand situation looks to be lacking, most traders are staying laser focused on the war escalations going on with Russia and Ukraine," said Dennis Kissler, senior vice president of trading at BOK Financial.

Russia is the world's second largest crude oil exporter after Saudi Arabia, so major disruptions could impact global supplies.

"For oil, the risk is if Ukraine targets Russian energy infrastructure, while the other risk is uncertainty over how Russia responds to these attacks," said ING analysts in a note.

China on Thursday announced policy measures to boost trade, including support for energy product imports, amid worries over U.S. President-elect Donald Trump's threats to impose tariffs.

Meanwhile, OPEC+ may push back output increases again when it meets on Dec. 1 due to weak global oil demand, said three OPEC+ sources familiar with the discussions.

The group, which combines the Organization of Petroleum Exporting Countries and allies like Russia, pumps around half the world's oil. It had initially planned to gradually reverse production cuts from late 2024 and through 2025.

Weighing on the market was a rise in U.S. crude inventories of 545,000 barrels to 430.3 million barrels in the week ended Nov. 15, exceeding analysts' expectations.

Gasoline inventories last week rose more than forecast, while distillate stockpiles posted a larger-than-expected draw, according to the Energy Information Administration data.