Expectations of Oil Supply Disruption Drive Crude Prices Up
Global oil markets witnessed a wave of increases today, Tuesday, supported by traders' fears of a potential disruption of supplies coming from Russia, following ongoing Ukrainian attacks on Russian refineries using drones.
In today's trading, Brent crude futures recorded a slight increase of 0.2%, reaching $67.59 per barrel. Similarly, West Texas Intermediate crude futures rose by the same percentage to $63.46 per barrel.
This rise comes amid the Ukrainian military campaign, which is intensifying its attacks on energy infrastructure in Russia, in an effort to hinder the logistical and financial capabilities of the war, while diplomatic efforts to end the conflict between the two countries remain stalled.
In his analysis of the situation, Tony Sycamore, a market analyst at IG, noted in a client memo that "growing concerns about supply disruptions from Russia, a major producer contributing over 10% of global oil production, are supporting oil prices," according to Reuters.
On another note, in a separate development related to economic pressures, U.S. Treasury Secretary Scott Pruitt stated on Monday that "the government will not impose additional tariffs on Chinese goods to encourage China to stop its purchases of Russian oil, unless European countries impose high tariffs on China and India."
Market participants are also awaiting the U.S. Federal Reserve (the Fed) meeting today and tomorrow, Wednesday, where expectations lean towards a potential interest rate cut. This decision could lower borrowing costs, which may stimulate economic activity and boost fuel demand. Sycamore commented on this effect, saying: "The weakening dollar, driven by expectations of the Fed cutting interest rates this week, has supported crude oil prices."
