Oil prices rose on Wednesday (September 10th) after Israel attacked Hamas leaders in Qatar, Poland shot down a drone, and the US pushed for new sanctions on Russian oil buyers, but concerns over crude oversupply limited further gains.

Brent crude rose 56 cents, or 0.8%, to $66.95 a barrel, as of 08:35 GMT, and U.S. West Texas Intermediate crude rose 56 cents, or 0.9%, to $63.19 a barrel.

Prices had closed up 0.6% in the previous trading session after Israel said it had attacked Hamas leaders in Doha. Both benchmarks rose nearly 2% shortly after the strikes, but then recovered significantly.

Elsewhere, geopolitical tensions also escalated when Poland shot down a drone in a widening Russian offensive in western Ukraine on Wednesday, marking the first time a NATO member has fired in the war. However, there is no immediate threat of supply disruption.

"The dark cloud of a surplus is looming over the market, with Brent trading two dollars lower than last Tuesday. The geopolitical risk premium in oil rarely lasts long unless a supply disruption actually occurs," said SEB analysts.

Meanwhile, US President Donald Trump has urged the European Union to impose 100% tariffs on China and India as a strategy to pressure Russian President Vladimir Putin, according to several sources.

China and India are major buyers of Russian oil, which has helped support Russia's coffers since it launched its invasion of Ukraine in 2022.

"Uncertainty remains over the extent to which the administration will act, as aggressive action could clash with efforts to manage inflation and influence the Federal Reserve to lower interest rates," said LSEG analysts. Traders expect the Federal Reserve to cut interest rates at its September 16-17 meeting, which would boost economic activity and oil demand.

However, the supply outlook remains bearish. The US Energy Information Administration (EIA) warned that global crude oil prices will come under significant pressure in the coming months due to rising inventories as OPEC+ increases production. U.S. crude oil, gasoline, and distillate inventories rose last week, according to market sources, citing data from the American Petroleum Institute (API) on Tuesday. Government data will be released at 14:30 GMT. (alg)

Source: Reuters