Oil rises more than 2% as Russian port suspends oil exports after Ukrainian attack
A drone view shows oil pumpjacks and tanks in a farmer’s field near Kindersley, Saskatchewan, Canada September 5, 2024. REUTERS/Todd Korol
HOUSTON :Oil prices increased by more than 2 per cent on Friday as Russia's port of Novorossiisk halted oil exports following a Ukrainian drone attack that hit an oil depot in the Russian energy hub, stoking supply concerns.
Brent crude futures were up $1.45, or 2.3 per cent, at $64.46 a barrel by 1:12 p.m. EDT (1812 GMT), while U.S. West Texas Intermediate crude rose $1.55, or 2.64 per cent, to $60.24 a barrel.
At current levels, Brent was heading for a weekly gain of 1.3 per cent and WTI a gain of 0.8 per cent.
Friday's attack damaged a ship in port, apartment blocks and an oil depot in Novorossiisk, injuring three of the vessel's crew, Russian officials said.
"The hit on that Russian terminal was huge and seems to have had a bigger impact than previous attacks," said Phil Flynn, senior analyst with Price Futures Group.
PORT EXPORTS 2 per cent OF GLOBAL SUPPLY
The port paused oil exports, equivalent to 2.2 million barrels per day, or 2 per cent of global supply, and oil pipeline monopoly Transneft suspended crude supplies to the outlet, two industry sources told Reuters.
"The intensity of these attacks has increased; it's much more often. Eventually, they could hit something that causes lasting disruption," said Giovanni Staunovo, commodity analyst at UBS.
Ukraine on Friday said it separately struck an oil refinery in Russia's Saratov region and a fuel storage facility in nearby Engels overnight.
Investors are trying to assess the impact of the latest attacks and what they mean for Russian supply longer term, he said.
Investors are also watching the impact of Western sanctions on Russian oil supply and trade flows.
Britain on Friday issued a special licence allowing businesses to continue working with two Bulgarian subsidiaries of sanctioned Russian oil firm Lukoil, as the Bulgarian government seized control of the assets.
The U.S. imposed sanctions banning deals with Russian oil companies Lukoil and Rosneft after November 21 as part of efforts to bring the Kremlin to peace talks over Ukraine.
About 1.4 million bpd of Russia's oil, or almost a third of seaborne export potential, has been added to stocks held on tankers as unloading slows due to the U.S. sanctions against Rosneft and Lukoil, JPMorgan said on Thursday.
Unloading cargoes could become much more challenging after the November 21 cut-off to receive oil supplied by the companies, the bank added.
Meanwhile, the number of rigs drilling for oil in the United States rose by 3 to 417 in the week to November 14, data from oil services firm Baker Hughes showed on Friday.
