Oil prices have increased due to growing concerns over supply disruptions amid the escalating conflict between Russia and Ukraine. As of 7:17 AM WAT on Tuesday, Brent crude rose by 37 cents, or 0.54%, to $68.52 a barrel, while US West Texas Intermediate crude was at $65.02 a barrel, up $1.01, or 1.58%. The market is also awaiting the upcoming US jobs data, which may lead to interest rate cuts.
The recent Ukrainian drone attacks on Russian facilities have resulted in the shutdown of sites accounting for at least 17% of Russia’s oil-processing capacity, equivalent to 1.1 million barrels per day. Ukraine’s President Volodymyr Zelenskiy has announced plans for new strikes deep into Russia, following weeks of intensified attacks on Russian energy assets. The ongoing conflict has seen both countries intensify airstrikes, with Russia targeting Ukraine’s energy and transport systems, and Ukraine attacking Russian oil refineries and pipelines.
Additionally, Chinese President Xi Jinping’s vision for a “new global order” may potentially add to geopolitical tensions. During a summit with the leaders of Russia and India, Xi pressed for a new global security and economic order that prioritizes the “Global South”, posing a direct challenge to the US. China and India are significant buyers of crude oil from Russia, the world’s second-largest exporter.
The market is now looking ahead to a meeting among members of the Organization of the Petroleum Exporting Countries and their allies on September 7, seeking clues on future production plans. The consensus is that OPEC+ will maintain current output levels, having unwound supply cuts over the past half year. This, combined with concerns about the economic impact of tariffs, has led to oil supply growing faster than demand, according to the International Energy Agency.
The outcome of the OPEC+ meeting and the US jobs data will be closely watched, as they may have significant implications for the global oil market. The ongoing conflict between Russia and Ukraine, as well as the shifting global economic landscape, will continue to influence oil prices in the coming weeks. As the situation develops, investors and market analysts will be monitoring the situation closely, seeking to understand the potential impact on the global economy.
