Oil prices surge after strike on Russian oil depot; oversupply concerns remain
Oil prices rose sharply Friday after a Ukrainian drone attack reportedly damaged a major oil depot in the Russian Black Sea port of Novorossiysk, potentially tightening global supply
At 04:40 ET (09:40 GMT), Brent oil futures for January jumped 1.5% to $63.94 a barrel and West Texas Intermediate crude futures rose 1.7% to $59.67 a barrel.
Oil surges on Ukraine-Russia attack
Oil prices gave climbed more than 1% following reports that stated a Ukrainian drone attack early-Friday damaged several facilities in the Russian Black Sea port of Novorossiysk, including an oil depot.
Industry sources say crude oil shipments via Novorossiysk reached 3.22 million tons, or 761,000 barrels a day, in October, with a total of 1.794 million tons of oil products exported.
The attack saw traders pricing in a greater risk premium into crude prices, and ramped up bets on more supply disruptions.
Oil’s rebound was also driven by some bets that recent U.S. sanctions against Russia’s largest oil firms will spur some disruptions in oil supplies.
The U.S. Treasury had in late-October announced sanctions against Russia’s Rosneft and Lukoil, which are now set to take effect from November 21.
Both companies were seen scaling back several operations in anticipation of the deadline, with the sanctions expected to further crimp Russia’s ability to sell oil. The sanctions are aimed largely at pressuring Moscow into a ceasefire with Ukraine, although little progress has been made on that front.
Oversupply concerns remain in play
Even with these gains, the two benchmark contracts are unlikely to post any significant gains this week, with selling earlier in the week pushed them to three-week lows.
Declines in crude were driven chiefly by concerns over a supply glut in 2026. These came to a head on Wednesday following a bearish report from the Organization of Petroleum Exporting Countries, which showed the cartel forecasting a small surplus next year.
The OPEC had until Wednesday maintained a positive outlook on markets going into 2026. But a shift in the cartel’s stance rattled oil markets, sending prices lower by about 4% on Wednesday.
The International Energy Agency also, on Thursday, forecast an even larger supply glut next year, citing increased production by the OPEC and other countries.
The IEA warned that demand growth is expected to slow amid rising economic uncertainty across the globe.
Additionally, the U.S. Energy Information Administration reported a larger-than-expected rise in U.S. crude stocks last week, adding to the oversupply concerns.
"The EIA’s report showed that U.S. crude oil inventories increased by 6.4m barrels over the last week, larger than expected and more than the 1.3m barrel increase the API reported the previous day. This leaves crude stocks at their highest level since June," said analysts at ING, in a note.
Source : Investing.com
