Oil prices fell back slightly on Thursday, a day after settling at multi-month highs on U.S. President Joe Biden's latest sanctions targeting Russia and a larger than forecast fall in U.S. crude stocks.
Brent crude futures were down 12 cents, or 0.15%, to $81.91 per barrel at 1415 GMT, after rising 2.6% in the previous session to their highest since July 26.
U.S. West Texas Intermediate crude futures were down 18 cents, or 0.22%, to $79.86 a barrel, after gaining 3.3% on Wednesday to their highest since July 19.
The Biden administration on Wednesday imposed hundreds of sanctions targeting Russia's military industrial base and evasion schemes, after earlier levying broader sanctions on Russian oil producers and tankers. Moscow's top customers are now scouring the globe for replacement barrels, while shipping rates have surged too.
With Donald Trump being sworn in for his second term on Monday, "the market is approaching the 'wait-and-see' phase and awaits the reaction from the incoming U.S. administration on the issue" of sanctions, said Tamas Varga at oil broker PVM.
Pricier oil may also lead to clashes between Trump and the Organization of the Petroleum Exporting Countries (OPEC), if the incoming president follows his previous playbook.
During his first term, Trump demanded the producer group rein in prices whenever Brent climbed to around $80.
OPEC and its allies, which collectively as OPEC+ have been curtailing output over the past two years, are likely to be cautious about increasing supply despite the recent price rally, said Commodity Context founder Rory Johnston.
"The producer group has had its optimism dashed so frequently over the past year that it is likely to err on the side of caution before beginning the cut-easing process," Johnston said.
Also supporting prices, U.S. crude oil stocks fell last week to their lowest since April 2022 as exports rose and imports fell, the Energy Information Administration (EIA) said on Wednesday.
The 2-million-barrel draw was more than the 992,000-barrel decline analysts had expected in a Reuters poll, and added to a tightened global supply outlook.
Limiting oil's gains, Israel and Hamas agreed to a deal to halt fighting in Gaza and exchange Israeli hostages for Palestinian prisoners, according to an official.
On the demand front, global oil expanded by 1.2 million barrels per day (bpd) in the first two weeks in 2025 from the same period a year earlier, slightly below expectations, JPMorgan analysts wrote in a note.
The analysts expect oil demand to grow by 1.4 million bpd year on year in coming weeks, driven by heightened travel activities in India, where a huge festival gathering is taking place, as well as by travel for Lunar New Year celebrations in China at the end of January.
Some investors are also eyeing potential interest rate cuts by the U.S. Federal Reserve in 2025 following data on an easing in core U.S. inflation - which could lend support to economic activities and energy consumption.