Oil edges higher as supply disruptions mount despite rising US stockpiles

Oil prices rose on Thursday as persistent supply disruptions across key producing regions outweighed bearish signals from rising US crude inventories, keeping markets on edge amid the ongoing Middle East conflict.

Brent crude futures increased $1.13, or 1.1%, to $103.35 a barrel by 0051 GMT, while US West Texas Intermediate (WTI) gained $1.08, or 1.2%, to $91.40 a barrel, recovering after both benchmarks fell more than 2% in the previous session.

The market remained tightly focused on supply risks linked to the conflict, which has severely constrained shipments through the Strait of Hormuz, a route that typically carries around one-fifth of the world’s crude oil and liquefied natural gas supply. The International Energy Agency has characterised the situation as the largest oil supply disruption on record.

Additional supply pressures emerged from multiple regions. Iraqi oil production has declined as storage tanks reached critical capacity levels, while disruptions caused by Ukrainian drone strikes, pipeline incidents and tanker seizures have sidelined about 40% of Russia’s oil export capacity, according to market estimates.

In contrast, US inventory data pointed to weaker demand conditions. Crude stockpiles rose by 6.9 million barrels to 456.2 million barrels in the week ended March 20, marking the highest level since June 2024 and significantly exceeding analysts’ expectations for a 477,000-barrel increase.

Diplomatic developments offered limited reassurance to markets. Iran said it was still reviewing a US proposal aimed at ending the conflict but indicated it had no intention of entering talks at this stage. US officials warned that Washington could intensify pressure if Tehran failed to accept conditions outlined in a 15-point plan, which includes removing highly enriched uranium stockpiles, halting enrichment activities, restricting ballistic missile development and curbing financial support to regional allies.

Analysts said optimism about a ceasefire has diminished, leaving prices sensitive to further military escalation or negotiation setbacks.

Separately, Japan stepped up contingency planning as Prime Minister Sanae Takaichi requested an additional coordinated release of emergency reserves during talks with Fatih Birol, reflecting concerns about prolonged instability in global energy markets.

Meanwhile, India purchased its first cargo of Iranian liquefied petroleum gas in years after the United States temporarily lifted sanctions on Tehran’s oil and refined fuel exports, signalling shifting trade flows amid the crisis.