Oil gains almost 2% as Russian port suspends oil exports after Ukrainian attack

LONDON: Oil prices climbed nearly 2% on Friday, boosted by supply fears after the Black Sea port of Novorossiisk halted oil exports following a Ukrainian drone attack that hit an oil depot in the major Russian energy hub.

Brent crude futures were up $1.04, or 1.65%, at $64.05 a barrel by 1428 GMT, while U.S. West Texas Intermediate crude advanced $1.15, or 1.96%, to $59.84 a barrel.

The contracts were more or less stable on the week. At those levels, Brent was heading for a weekly gain of around 0.7% and WTI a modest gain of 0.15%.

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 port paused oil exports 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.

The market is trying to assess the impact of the latest attacks and what this means for Russian supply longer term, he said.

Industry sources say crude oil shipments via Novorossiisk reached 3.22 million tonnes, or 761,000 barrels a day, in October, with a total of 1.794 million tonnes of oil products exported.

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 barrels per day 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.