Oil advances as storm-hit supply and Middle East risks support prices

Oil prices pushed higher on Wednesday, extending gains as disruptions to crude output and exports from the United States kept supply risks in focus, while simmering tensions across the Middle East added a geopolitical premium to the market.

Brent crude futures traded at $67.85 a barrel in early Asian hours, up 28 cents, while U. S. West Texas Intermediate rose 35 cents to $62.74 a barrel. The advances followed a winter storm that curtailed production in key shale regions and slowed export operations along the Gulf Coast, tightening near-term availability at a time when traders remain alert to broader political risks.

The rally reflected a market recalibrating supply expectations after freezing temperatures knocked out wells, pipelines and loading facilities in parts of Texas and neighbouring states. Industry estimates indicate that several hundred thousand barrels per day of crude output were temporarily shut in as operators prioritised safety and infrastructure integrity. While restoration efforts are under way, the pace of recovery has varied across basins, with some producers flagging lingering constraints linked to power supply and frozen equipment.

Export flows have also been affected, with weather-related delays at ports disrupting shipments to Europe and Asia. The United States has become a critical supplier to global markets, particularly since sanctions and production curbs elsewhere have reshaped trade routes. Any interruption to Gulf Coast exports tends to ripple quickly through pricing, especially when inventories are not excessively high.

Market participants said the storm-related disruptions came at a moment when spare capacity outside the Middle East remains limited. Output discipline among producers aligned with OPEC+ has helped keep global balances relatively tight, even as demand growth moderates. Several members of the producer group continue to signal caution on increasing supply too quickly, citing the risk of renewed volatility.

Beyond weather, geopolitics continued to underpin prices. Tensions across parts of the Middle East have sustained concerns about shipping security and potential supply interruptions, even when no immediate outages are reported. Energy traders typically price in a risk buffer when the region faces uncertainty, given its central role in global crude flows.

Shipping through strategic waterways has drawn particular attention, with insurers and freight operators factoring in higher costs and longer routes. Although physical supply has largely continued to move, the added complexity has supported benchmark prices and kept volatility elevated. Analysts note that even marginal risks can have an outsized impact when combined with other supply-side pressures.

On the demand side, signals have been mixed. Consumption in Asia has shown resilience, supported by steady refinery runs and seasonal travel demand, while economic data from parts of Europe point to a slower recovery. In the United States, fuel demand has held up, though refiners remain cautious about margins amid fluctuating crude prices and maintenance schedules.

Financial markets have also played a role. Hedge funds and other money managers have added to bullish positions in oil futures over the past few sessions, betting that supply risks outweigh near-term demand softness. That positioning has amplified price moves, particularly during thin trading hours in Asia.

Currency movements provided an additional tailwind. A softer U. S. dollar has made commodities priced in the currency more attractive to buyers using other currencies, offering modest support to crude prices. Historically, such dynamics tend to reinforce rallies driven by physical market factors.

Industry executives have sought to temper expectations of a prolonged spike, stressing that weather-related disruptions are typically short-lived. Production outages linked to freezing conditions are often restored once temperatures normalise, and export backlogs can be cleared within days. However, the frequency of extreme weather events has prompted renewed debate about infrastructure resilience and the cost of climate-related risks to energy supply.