By Arathy Somasekhar

(Reuters) - Oil prices extended gains on Wednesday as a larger than expected fall in U.S. crude inventories and escalating geopolitical tensions raised investor worries about tighter supplies.

Brent futures for June delivery rose 20 cents, or 0.22%, to $89.12 per barrel, while U.S. West Texas Intermediate (WTI) crude futures for May climbed 17 cents, or about 0.2%, to $85.32 a barrel, at 0015 GMT.

Both Brent and WTI had climbed to its highest since October on the previous day.

U.S. crude oil inventories fell by 2.3 million barrels last week, higher than the 1.5 million barrel drop forecast by analysts in a Reuters poll. U.S. government data is due later on Wednesday.

On the geopolitical front, a Ukrainian drone struck one of Russia's biggest refineries in an attack Russia initially said it repelled.

Russia, among the top three global oil producers and one of the largest exporters of oil products, has been contending with Ukrainian attacks on oil refineries and has also attacked Ukrainian energy infrastructure.

Elsewhere, Iran said it would take revenge against Israel for an airstrike that killed two of its generals and five military advisers at its embassy compound in Damascus, raising the risk of further escalation in the Middle East conflict.

Also tightening supplies, Mexico's state energy company Pemex requested its trading unit to cancel up to 436,000 barrels per day of crude exports this month as it gets ready to process domestic oil at the new Dos Bocas refinery, an internal document seen by Reuters showed.

However, an OPEC+ ministerial panel is unlikely to recommend any oil output policy changes at a meeting on Wednesday, five OPEC+ sources told Reuters.

The U.S. dollar also edged down against a basket of currencies on Wednesday, helping support demand for dollar-denominated commodities like oil.