Following an assault on Russian facilities by the Ukrainians, oil prices rise to multi-month highs

For the second straight session, oil prices surged to multi-month highs on Tuesday, propelled by conjecture on the ramifications of Ukraine’s recent attacks on Russian refineries on the world’s petroleum reserves. (USA) US West Texas Intermediate oil futures reached their highest level since October 27 when they increased by 0.9%, or 75 cents, to settle at $83.47 per barrel. Additionally, the price of the global standard Brent oil increased by 0.6%, reaching a record high of $87.38 per barrel on October 31.

According to Reuters estimates, the increased assaults by Ukraine on the Russian oil infrastructure, including the use of drones to target at least seven refineries this month, have resulted in the suspension of around 7%, or 3,70,500 barrels per day, of Russia’s refining capacity.

Although Russian crude oil exports have increased as a consequence of the decreased refining activities, Alex Hodes, an energy analyst at StoneX, pointed out that storage limitations might lead to output reductions. According to Hodes’ research, the strikes on Russian refineries may cause the world’s petroleum supply to drop by around 3,50,000 barrels per day, which may result in a $3 per barrel increase in US oil prices.

According to SEB Research analyst Bjarne Schieldrop, there may still be an indirect effect on oil prices via higher refined product margins even in the absence of a direct loss of Russian crude supplies.

Reduced petroleum shipments from Iraq and Saudi Arabia, together with signs of increased demand and economic expansion in China and the US, provided further support for oil prices. According to the Commerce Department, there was a notable uptick in single-family house construction in the United States in February. This means that economic growth and oil consumption might be positively impacted.

Positive surprises in oil demand statistics and the voluntary extension of OPEC+ cuts till the end of June, according to UBS analyst Giovanni Staunovo, have supported prices. Staunovo predicts that Brent Crude will trade between $86 and $90 per barrel by the end of June, with a range of prices within which it will move this year.

The American Petroleum Institute’s report on U.S. oil and gasoline stocks, which is expected to be released around 4:30 p.m. ET (2030 GMT), is now attracting market interest. On Wednesday, at 10:30 a.m. ET (1430 GMT), official statistics from the U.S. Energy Information Administration will also be released.