Oil Prices Soar as Ukraine Disrupts Russian Petroleum Supplies

March 20, 2024
crude oil prices

By Adedapo Adesanya 

Oil prices further surged on Tuesday as traders assessed how Ukraine’s recent attacks on Russian refineries would affect global petroleum supplies.

Brent crude jumped by 0.6 per cent to $87.38 a barrel, its highest since October 31, while the US West Texas Intermediate (WTI) crude gained 75 cents or 0.9 per cent to settle at $83.47 a barrel, its highest since October 27.

Ukraine has stepped up attacks on Russian oil infrastructure this year, with at least seven refineries targeted by drones just this month.

The attacks have shut down 7 per cent or around 370,500 barrels per day of Russian refining capacity, according to a report by Reuters.

Market analysts noted that while lower refining activity has led to an increase in Russian crude oil exports, it could also lead to crude oil production cuts as the country faces storage constraints.

There are also indications that even if the attacks do not lead to a direct loss of Russian crude supply, there is still a spillover effect for oil prices from surging refined product margins.

Gains also found support from the world’s two leading economies – the US and China while crude export declines in the two of the largest producers in the Organisation of the Petroleum Exporting Countries (OPEC), Saudi Arabia and Iraq, lent to price movement.

US data showed that single-family homebuilding rebounded sharply in February, the country’s Commerce Department reported. Homebuilding could boost economic growth and by extension supporting oil demand.

China’s factory output and retail sales rose in the January-February period, marking a solid start for 2024 and offering some relief to policymakers even as weakness in the property sector continued to pressure the largest oil importer’s economy and confidence.

This will provide an early boost to China’s hopes of reaching what analysts have described as an ambitious 5.0 per cent gross domestic product (GDP) growth target for this year.

Crude oil inventories in the US fell this week by 1.519 million barrels for the week ending March 15, according to the American Petroleum Institute (API), after analysts had predicted a 77,000 barrel build. The API reported a large 5.521-million-barrel rise in crude inventories in the previous week.

Official stockpile data from the US Energy Information Administration (EIA) is expected later on Wednesday.

Adedapo Adesanya

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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