Oil prices rose on Tuesday as concerns about supply disruptions grew amid an escalation of the conflict between Russia and Ukraine, and as the market weighed whether upcoming US jobs data would lead to interest rate cuts.
Brent crude added 37 cents, or 0.54%, to $68.52 a barrel by 0617 GMT, while US West Texas Intermediate crude was at $65.02 a barrel, up $1.01, or 1.58%.
WTI futures did not settle on Monday due to the Labor Day holiday in the US “Oil prices are drawing short-term strength from the prospect of imminent Fed easing, which is reviving demand sentiment,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
A raft of US labour data is due this week ahead of the Federal Reserve’s September meeting, which could strengthen the case for monetary easing after surprisingly weak US payrolls data released in July.
On the supply side, recent Ukrainian drone attacks shut down facilities accounting for at least 17% of Russia’s oil-processing capacity, or 1.1 million barrels per day, according to Reuters’ calculations.
On Sunday, Ukraine’s President Volodymyr Zelenskiy said Ukraine plans new strikes deep into Russia after weeks of intensified attacks on Russian energy assets.
Three-and-a-half-years into the war, Russia and Ukraine have both intensified airstrikes in recent weeks.
Russia has targeted Ukraine’s energy and transport systems, while Ukraine has been attacking Russian oil refineries and pipelines.
“Ongoing risks to energy infrastructure in Russia remain high.
Ukraine struck more Russian oil refineries over the weekend as it ramped up its attacks on infrastructure,“ said Daniel Hynes, senior commodity strategist at ANZ, in a note on Tuesday.
China’s vision for “a new global order” could potentially add to geopolitical tensions.
Chinese President Xi Jinping pressed his vision on Monday for a new global security and economic order that prioritises the “Global South”, in a direct challenge to the US, during a summit that included the leaders of Russia and India.
China and India are the biggest buyers of crude oil from Russia, the world’s second largest exporter.
Trump has imposed additional tariffs on India over the purchases but not on China.
Investors now await a meeting among members of the Organization of the Petroleum Exporting Countries and their allies on September 7 for any clues on future production plans.
The market expects OPEC+ to keep output unchanged for now, after having unwound supply cuts over the past half year.
That, combined with concerns about the economic impact of tariffs, have led oil supply to grow faster than demand, according to the IEA.
“The scale of the surplus through next year means it’s unlikely the group will bring additional supply onto the market,” ING analysts said in a note.
“The bigger risk is OPEC+ deciding to reinstate supply cuts, given concerns about a surplus.”
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