Brent gains as Ukraine conflict heightens supply risks
The front-month ICE Brent contract has gained by $1.12/bbl on the day, to trade at $69.15/bbl at 09.00 GMT.
IMAGE: Oil storage tanks. Getty Images
Upward pressure:
Brent crude’s price has gained by more than $1/bbl after Ukraine escalated its attacks on Russian energy infrastructure, hitting several oil refineries over the weekend.
On Sunday, Ukrainian President Volodymyr Zelensky said Kyiv plans to carry out further strikes deep inside Russia following weeks of intensified attacks on its energy infrastructure, according to a Reuters report.
“Crude oil edge[d] higher… as geopolitical risks came back into focus,” remarked ANZ Bank’s senior commodity strategist Daniel Hynes.
The recent Ukrainian drone attacks have forced the shutdown of oil facilities accounting at least 17% of Russia’s oil-processing capacity, or about 1.1 million b/d, Reuters estimates.
“Ongoing risks to energy infrastructure in Russia remain high,” Hynes said. “Exports of Russian oil from its ports have dropped to a four-week low of 2.72mb/d [2.72 million b/d], according to tanker tracker data,” he added.
Downward pressure:
The oil market’s attention is increasingly turning to the OPEC+ meeting due on 7 September, according to analysts.
The prospect of a supply glut later this year as the Saudi Arabia-led oil producers group fully unwinds the existing supply cuts, has put some downward pressure on Brent today.
“We believe, just like the broader market, that the group will leave production levels unchanged for October,” two analysts from ING Bank said.
OPEC+ has rolled back 2.2 million b/d of additional voluntary supply cuts over the past six months, ahead of its initial plan.
“The scale of the surplus through next year means it’s unlikely the group will bring additional supply onto the market,” the two analysts added.
By Aparupa Mazumder
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