Oil markets opened the week under pressure from escalating geopolitical tensions, with recent attacks on Russian energy infrastructure pushing crude prices upward. As traders digest the implications of these disruptions, concerns about supply, sanctions, and downstream effects are mounting. This article explores how recent actions in Russia are influencing oil prices, what the implications may be for global energy markets, and how market participants are responding.
In recent days, Ukraine has intensified drone strikes targeting major Russian refineries and export terminals. Notably, the Primorsk export terminal (Russia’s largest Baltic oil port) has been impacted.
The Kirishinefteorgsintez refinery in Kirishi (Leningrad Oblast) also sustained attacks. The facility processes a large volume of crude, making it one of Russia’s more significant refining assets.
Other facilities and pumping stations feeding export routes, including those linked to ports like Ust-Luga, have come under similar pressure.
Brent crude and U.S. West Texas Intermediate (WTI) both saw upward movement; Brent rose to around US$67-$67.50/barrel, while WTI traded in the $62-$63 range, reflecting renewed supply concerns.
Prices have gained more than 1% over the past week, driven largely by fears of export interruptions and damage to Russia’s refining capacity.
Analysts suggest the attacks are raising “upside pressure” on oil, meaning the risk for further price increases is elevated given the potential for more disruptions.
Supply risk versus demand concerns: While there is concern over supply from Russia, global oil markets are still contending with possible oversupply tied to OPEC+ production policies. That tension adds complexity to price forecasting.
Sanctions and export redirection: U.S. pressure is increasing for tighter sanctions. Some proposals suggest restricting purchases of Russian oil unless buyers adhere to stricter policies—this could force shifts in trade flows, affecting major consumers like India and China. Domestic effects in Russia: Fuel shortages and strain on refining capacity are becoming more visible. Russian regions are reportedly trying to maintain output despite damage, but the cumulative effect of repeated attacks may degrade efficiency and capacity.
Continued drone attacks or other sabotage could cause sharper, more immediate price spikes if critical export infrastructure is compromised.
OPEC+ meetings, especially any decisions on output quotas, will also matter—if supply from non-Russian producers increases, that may offset some risk.
U.S. Federal Reserve policy and macroeconomic indicators (like inflation, demand forecasts) are still relevant. A weaker global demand outlook or stronger dollar could cap gains.
Persistent attacks may force Russia to invest more in resilience (defensive infrastructure, alternative export routes), which can add costs and reduce net supply.
Countries reliant on Russian crude might accelerate diversification or reduce dependency through policy shifts, renewable energy, or strategic reserves.
The energy pricing landscape could see volatility becoming more normative, with geopolitical risks (infrastructure attacks, sanctions) shaping both supply projections and risk premiums built into oil prices.
OPEC+ meetings, especially any decisions on output quotas, will also matter—if supply from non-Russian producers increases, that may offset some risk.
U.S. Federal Reserve policy and macroeconomic indicators (like inflation, demand forecasts) are still relevant. A weaker global demand outlook or stronger dollar could cap gains.