Oil Up After 2.4M-Barrel U.S. Draw; U.S. Doubles Tariffs on India to 50%, Tightening Trade Flows

Oil prices inched higher on Wednesday after U.S. inventories showed a bigger-than-expected draw and as fresh U.S. tariffs on Indian imports added a new wrinkle to global trade flows.

Brent futures traded around $67.65 a barrel, up roughly 0.6%. West Texas Intermediate sat near $63.77, a gain of about 0.8%. Both benchmarks had snapped a losing streak - each was down more than 2% the day before.

The Energy Information Administration's weekly data flagged a 2.4 million-barrel drop in U.S. crude inventories to 418.3 million barrels, versus the market's forecast for a 1.9 million-barrel draw. Fuel inventories were also tighter than expected: gasoline fell by about 1.2 million barrels (analysts had been looking for a larger draw), while distillates - diesel and heating oil - surprised on the downside with a 1.8 million-barrel decline despite forecasts for a rise.

Gasoline demand numbers, in particular, look seasonal. With the Labor Day weekend looming, there's the usual uptick in travel and a final push for summer-blend gasoline before refiners switch to winter formulas. That seasonal squeeze helps explain some of the buying interest in crude.

Adding to the mood, the U.S. administration doubled tariffs on certain imports from India - rates now reach as high as 50% - citing New Delhi's purchases of Russian oil. The immediate trade impact appears limited, according to India's finance officials, but the knock-on effects on pricing, trade routes and manufacturers are already being talked about in economic briefings. In short: tariffs change how flows move, even if the initial headline numbers don't jump off the page.

There's also a geopolitical overlay. Attacks on energy and export infrastructure in the Russia-Ukraine conflict have been escalating. Overnight strikes and drone activity hit energy facilities on both sides, and that kind of disruption keeps a premium on physical barrels - at least until shipping and export schedules prove otherwise. Separately, reports indicate Russia has adjusted export plans at western ports, adding around 200,000 barrels per day to its August schedule after last week's refinery strikes - a tactical shift that matters for tight regional balances.

So you get three forces colliding: weekly U.S. stock draws, tariff-driven trade frictions between major consumers and suppliers, and operational risk from conflict-related damage. None of them is a blockbuster on its own, but together they make for a market that's twitchy rather than flat-out bearish.

Short-term volatility looks likely while traders parse inventory trends against these policy and supply surprises. How the market prices the interplay between tighter fuel stocks, rerouted trade flows because of tariffs, and the state of Russian exports will determine whether this little uptick turns into a more sustained rally - or just a blip.

How large will the tariff ripple be once companies fully reconfigure logistics and contracts?