Oil Prices Rise on Ukrainian Drone Attacks Targeting Key Russian Hubs in the Baltic
Oil prices continued their rise amid concerns that escalating Ukrainian drone attacks could disrupt oil flows through Russia's two most important crude export hubs on the Baltic coast.
Brent crude rose above $67 a barrel, after falling 1.7% on Thursday. The attacks have temporarily halted operations at Primorsk, the region's main oil loading port, and targeted three pumping stations that push crude to the Ust-Luga hub, a source familiar with the situation said.
Adding to the focus on Moscow's exports, the US will urge its Group of Seven allies to impose tariffs as high as 100% on China and India on their purchases of Russian oil. Canada, which holds the G-7 presidency, convened a meeting of the group's finance ministers on Friday to "discuss further steps to increase pressure on Russia and curb its war machine," according to a statement.
The rising risk premium offset the International Energy Agency's projection of a record oil supply surplus next year. The agency's more pessimistic report on Thursday followed the OPEC+ producer group's decision to continue returning unused barrels to the market in October, albeit at a lower rate than previous increases.
The oil market is caught in a "tug-of-war" between bearish fundamentals and rising geopolitical risks, Citigroup Inc. said this week, reiterating its view that Brent will fall to the low $60s by year-end.
With Brent battered by competing forces, prices are increasingly trapped in a range between $65 and $70 per barrel. They have been plowing through that range since early August. "This volatility reflects the market's ongoing struggle to balance the risks of a growing surplus with ongoing geopolitical uncertainty and resilient refined product margins," said Ole Hvalbye, a commodities analyst at SEB AB. "Market sentiment remains generally cautious." (alg)
Source: Bloomberg
