On Tuesday, oil prices experienced an uptick, driven by increasing apprehensions regarding potential supply disruptions in light of the intensifying conflict between Russia and Ukraine. Brent crude increased by 40 cents, representing a rise of 0.59%, reaching $68.55 a barrel by 0149 GMT. Meanwhile, U.S. West Texas Intermediate crude stood at $65.06 a barrel, reflecting an increase of $1.05, or 1.64%.
Recent Ukrainian drone attacks have resulted in the shutdown of facilities responsible for at least 17% of Russia’s oil processing capacity, equating to 1.1 million barrels per day, as per calculations by Reuters. On Sunday, Ukraine’s President Volodymyr Zelenskiy announced that Ukraine intends to conduct new strikes deep into Russia following weeks of intensified assaults on Russian energy infrastructure.
Three-and-a-half years into the conflict, both Russia and Ukraine have escalated their airstrike activities in recent weeks. Russia has focused its efforts on Ukraine’s energy and transport infrastructure, whereas Ukraine has been conducting strikes on Russian oil refineries and pipelines. Risks to energy infrastructure in Russia continue to be elevated. Ukraine intensified its offensive over the weekend by targeting additional Russian oil refineries, reflecting a strategic escalation in its infrastructure attacks,” noted Daniel Hynes.
China’s aspiration for “a new global order” may indeed exacerbate geopolitical tensions. Chinese President Xi Jinping articulated his vision on Monday for a new global security and economic framework that emphasizes the “Global South,” presenting a direct challenge to the United States, during a summit that featured the leaders of Russia and India. China and India represent the largest purchasers of crude oil from Russia, which holds the position of the world’s second largest exporter.
Trump has enacted further tariffs on India concerning its purchases, while refraining from imposing similar measures on China. Investors are currently anticipating a meeting among members of the Organization of the Petroleum Exporting Countries and their allies on September 7, seeking insights into potential further output increases from the group.